Best & worst performing sectors and stocks in FY23

The domestic market experienced an adrenaline rush in FY23 due to strong monetary policy stances by global central banks, soaring inflation, and the Russia-Ukraine war. For two fiscal years, FPIs sold equities in amounts of ₹140010 crores in FY22 and ₹37632 crores in FY 23. The Nifty FMCG, Auto, and Bank indices among domestic sectors indices experienced the best performances, while the Nifty Pharma, Energy, Metals, Realty, and IT indices saw the poorest performances in FY23. The NIFTY 50 saw a 2% negative return for the fiscal year while the NIFTY 500 experienced a 3.5% shrink. Unexpectedly, the NIFTY Midcap 100 index had a flat return for the year while NIFTY Next 50 index fell by 9.5% followed by NIFTY Small Cap 250, with a reported decrease of 9% witnessed during FY23.

Siddharth Oberoi , Founder and CIO at Prudent Equity

Banking and financial services, particularly PSU Banks stocks like UCO Bank, Karur Vysya, and Karnataka Bank, ought to be considered among the companies that have fared very well over the past 12 months. In the most recent quarter, these companies' revenues grew by double digits while their earnings more than doubled. This is mostly owing to the drastic reduction in provision that the majority of these banks have made as compared to the same period last year, when it was higher than typical due to the consequences of COVID-19. Also, these banks have experienced a significant improvement in their asset quality, while it is still elevated when compared to banks in the private sector. Stocks from the private sector like South Indian Bank and DCB have performed comparatively better than other private sector banks.

Unexpectedly, the FMCG industry has also performed quite well, despite being the one most negatively affected by the significant inflation we all saw over the last year. Mrs. Bector Foods and Speciality, a company from this sector, got listed at the end of 2020. For the last six months, the company's earnings increased by about 50%, owing to the festive season and the introduction of new items and capacity additions. In the 9M FY23 period, the company has already surpassed its FY22 profitability, and there is still one more quarter to go. Throughout the past year, the stock has had a positive return of almost 90%.

Speaking about the sector that has struggled this year, it would be IT, which was inevitable given the stellar returns the industry has produced since COVID began and through FY22. There have however been a few exceptions; firms like Cigniti Tech and KPIT Tech have had outstanding financial results. While KPIT increased its profits by more than 30% in a very difficult climate for the sector, Cigniti saw virtually a doubling of its earnings during the past several quarters. In the 9M FY23 timeframe, both of these businesses have already surpassed their FY22 earnings.

A R Ramachandran, Co-founder & Trainer-Tips2trades

Nifty IT & Nifty Metals have been two of the worst performing sectors as expected due to economic headwinds being faced by global markets over the past 1 year. With rising interest rate hike cycle  now almost at the end of the cycle, investors should buy quality IT & metal stocks like Infosys, TCS & Tata Steel which are now available at very attractive valuations. As US & European markets eventually settle down, FY24 should be much better for these two sectors this year."

Nifty PSU bank & Nifty FMCG have been the two stellar performers in FY23. A rising interest rate cycle has benefitted banks and especially PSU banks in general which has led to an excellent performance driven by stronger margins. However, FY24 could be tougher for PSU banks as a halt in interest rate hikes and investors moving on to banks with superior asset quality like ICICI, Kotak & HDFC bank could spell a below average year for PSU banks in FY24. In the FMCG space, ITC returns could be much lower this year as compared to FY23 as a gradual pick up in the consumption cycle especially in the second half of FY24 should lead to stronger buying in HUL, Nestle, Marico than ITC.

Suresh Mansharamani, an OKR Coach, Business Coach, Presidential Awardee, Co-Founder Tajurba

As of 2023, India's economy is expected to continue to grow, and the stock market is likely to reflect this growth. However, the performance of individual sectors and stocks can vary depending on various factors. This article will discuss the best and worst-performing sectors/stocks in India for the financial years 2023/24.

Best-performing Sectors/Stocks

Technology: The technology sector in India has been performing exceptionally well in recent years, and this trend is likely to continue in 2023/24. The sector includes companies that are involved in software development, IT services, and hardware manufacturing. Some of the top-performing companies in this sector include Infosys, Tata Consultancy Services (TCS), Wipro, and HCL Technologies. The sector’s growth is driven by the increasing adoption of digital technology and the shift toward cloud computing.

Healthcare: The healthcare sector in India is also expected to perform well in the financial years 2023/24. This sector includes companies involved in pharmaceuticals, medical devices, hospitals, and healthcare services. Some top-performing companies in this sector include Sun Pharmaceuticals, Dr. Reddy's Laboratories, Apollo Hospitals, and Fortis Healthcare. Due to an aging population, the sector will likely benefit from increased government spending on healthcare and rising demand for healthcare services.

Consumer Goods: The consumer goods sector in India is also expected to perform well in 2023/24. This sector includes companies that produce and distribute fast-moving consumer goods (FMCG), such as food, beverages, personal care products, and household items. Some of the top-performing companies in this sector include Hindustan Unilever, Nestle India, ITC, and Britannia Industries. The sector will likelybenefit from rising consumer demand, especially in rural areas.

Worst-performing Sectors/Stocks

Real Estate: The real estate sector in India has been struggling in recent years, and this trend is likely to continue in 2023/24. The sector includes companies involved in developing, selling, and leasing residential and commercial properties. Some of the top companies in this sector include DLF, Sobha, Godrej Properties, and Oberoi Realty. The sector faceschallenges such as oversupply, rising interest rates, and sluggish demand due to rise in interest rates.

Infrastructure: The infrastructure sector in India is also expected to face challenges in 2023/24. The sector includes companies developing roads, highways, airports, and other infrastructure projects. Some of the top companies in this sector include Larsen & Toubro, IRB Infrastructure, AdaniPorts, and SEZ. The sector is facing challenges such as delays in project execution, funding issues, and regulatory hurdles.

Banking: The banking sector in India has faced challenges in recent years, and this trend is likely to continue in 2023/24. The sector includes public and private banks providingbanking and financial services. Some of the top banks in India include the State Bank of India, HDFC Bank, ICICI Bank, and Axis Bank. The sector faces rising non-performing assets (NPAs), increased competition, and regulatory challenges.

In conclusion, the performance of sectors and stocks in the Indian stock market can vary depending on various factors. While some sectors and stocks will likely perform well in the financial years 2023/24, others may face challenges. Investors should carefully analyze the performance of individual sectors and stocks before making investment decisions.

Sachin Jasuja Founding Partner- Investment product/equities at Centricity Wealthtech

Some of the best performing stocks are TVS Motors, ITC, M&M, Cummins India and Bank of Baroda and the worst performing stocks are Adani Green, Heritage Foods, MphasiS, Lux Industries and Thyrocare Technologies.

The Best sectors are FMCG, Auto, Banks  and the worst Performing Sectors are IT and Pharma.

Abhishek Banerjee, Founder & CEO, Lotusdew

Though broader markets are flat and for smaller caps it has declined, there is a large deviation among stocks which explains why Indian stock market is still a stock pickers market. For example, stocks like Brightcom Group, which is held by many mutual funds, lost 85% of its value in last 12 months. Similarly, stocks like Tanla solution which powers Airtel's digital ledger technology to approve sms headers lost 63% of its value and a popular company like 8K miles lost almost 57% of the value. Sectorally specialized IT services seems to be one of the most impacted while some of the top performing stocks like Goldstart which manufactures durables is up more than 450% and food or consumer staples like edible oils given constraints of food supply chain has performed upto 800%.

Subhashis Kar, Founder & CEO of Techbooze Consultancy Services

Despite the challenges faced by the markets in the recent quarter, there have been notable performances from defensive sectors, including food & beverages, tobacco, healthcare equipment, and consumer durables. These sectors have benefited from stable consumer spending, leading to positive returns. The general industrial sector has also seen positive returns, buoyed by the central government's capex push.

To capitalize on these top-performing sectors, our outperforming screener identifies high-growth stocks such as ITC, Siemens, Varun Beverages, Polycab India, and KEI Industries. However, sectors such as commercial services, utilities, media, and retailing have underperformed, with the utilities sector facing significant corporate governance issues related to the Adani group. Consequently, our underperforming screener includes stocks such as Adani Total Gas and Adani Transmission, which have underperformed the Nifty 500 by more than 50 percentage points.

In light of these trends, it is essential to appreciate the significance of sectoral analysis and company-specific issues when investing in the stock market. By keeping an eye on the best and worst-performing sectors and stocks, investors can make informed decisions that align with their investment objectives.

Arun Chulani, Co-founder, First Water Capital Fund 

There are business cycles and there are market cycles. I believe that one should focus on the former as the latter can generally whiplash you. Some of sectors that I believe have fundamental tailwinds are those such as infra given the government's focus, energy transition given the inflationary pressures caused by conflict, and sectors that should be gaining traction due to the China +1 story.