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(Bloomberg) — Indian stocks are expected to end the year on a record winning streak, with rally drivers outpacing the country’s biggest companies.
Robust economic growth, an infrastructure surge and a pause in interest rate hikes have helped propel its stock market to successive highs. Stocks linked to real estate, industrials and capital goods are among those leading the gains, while Adani Group companies – the best performers of 2022 – mostly end with losses despite a rebound these last months.
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As the benchmark S&P BSE Sensex heads for an eighth year of gains with returns of 17% in 2023, expectations that the party led by Prime Minister Narendra Modi will win elections in 2024 are raising hopes that this race bullish trend continues.
Global funds bought more than $20 billion worth of local stocks in 2023, after withdrawing $17 billion last year, signaling investor preference for India as China struggles with an economic slowdown .
Here’s a look at some of the big stock market moves of 2023:
Real estate
An index of real estate values has reached its highest level since 2008, surpassing all other sector indices managed by the BSE Ltd. A pause in rising interest rates, demand for luxury housing and investments from Indians living abroad have boosted developers. Prestige Estates Projects Ltd. jumped around 140%, while DLF Ltd. almost doubled.
“The combination of strong pent-up housing demand, above-average affordability and 12-year low unsold inventory should lead to a virtuous multi-year real estate cycle,” according to a note from Jefferies this month.
Infrastructure
Engineering giants Larsen & Toubro Ltd. and UltraTech Cement Ltd. ranked among the top performers on the benchmark indicator, highlighting the focus on building infrastructure in the world’s most populous country.
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“Cement is a good play in real estate and infrastructure sectors in India and it can perform well in 2024,” said Arun Malhotra, fund manager at CapGrow Capital Advisors LLP. “We saw that real estate activity remained strong and companies were getting strong bookings for their projects. »
State-owned enterprises had their best year since 2009 as the government increased spending. While NTPC Ltd. and Power Grid Corp. of India Ltd. led the gains on the key 30-member index, public project lenders including REC Ltd.
Small and mid caps
The stellar performance of small-cap stocks has prompted investors to flock to take advantage of the gains, with many asset managers opening new funds to capitalize on demand.
Stocks including AurionPro Solutions Ltd. and Titagarh Rail Systems Ltd., climbed 546% and 365%, respectively. Notable mid-cap gainers include Aurobindo Pharma Ltd., Trent Ltd. and Polycab India Ltd.
For next year, Kotak Securities favors mega-caps due to their valuations and « greater immunity in the event of negative developments in the coming months », the brokerage said in a note dated December 18 .
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Adani, Vedanta
Four Adani group companies are among the top 10 worst performers in the S&P BSE 200 index this year, with flagship Adani Enterprises Ltd. having fallen by more than 25%. The conglomerate attracted global attention after a scathing report from short seller Hindenburg Research in January sparked a stock market rout.
Although some of its operations with lucrative assets, such as Adani Ports & Special Economic Zone Ltd. and Adani Power Ltd., have surpassed their pre-report levels, most of the group’s stocks have yet to fully recover their losses.
Vedanta Ltd. of billionaire Anil Agarwal has lost 15% this year, with investors wary of the mining giant’s heavy debt.
Technology, EV
New age tech companies have made a comeback, Zomato Ltd. having more than doubled its value thanks to the growth of online food ordering. Tata Motors Ltd. is among the top performers on the Sensex this year, rising 85% to a new record high and underscoring India’s drive to embrace electric vehicles for clean energy.
—With help from Ishika Mookerjee.
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