5 min read.Updated: 06 Jan 2022, 09:35 PM ISTAnoop Bhaskar
Automobile would be a key contributor to growth in profit pool as supply issues ease
Usually, most market chatter revolves around ‘inflection’ points or pivots, when markets change course. For astute investors, who are able to identify such trend ‘changes’, returns outpace the indices, as does AUM (assets under management) growth. One such often highlighted trend reversal was in 2002-03, after four-five years of a zig-zagging market from 1997 till 2002. The preceding phase, which exhausted even the most bullish investors, had favoured sectors like consumer staples; pharmaceuticals did well; IT services stabilized after the tech bubble crash of 2000. The mood was cautious, focus was on ‘clean’ balance sheets and even metal companies were adopting EVA (economic value added) as a key metric to measure the top management to improve their capital allocation policies in order to get investor’s nod! Metals & capital goods had shrunk, reeling from the expansionary mode of 1992-96; the economy, too, had withered after years of underinvestment, EPC/infrastructure owning companies were rarely found on the buy list of investors. Most investors were focused on keeping their portfolios ‘pristine’. Markets, however, were at an inflection point—winners of the past were soon to be left behind by new emerging winners for the next 4-5 years. From 2002 to 2012—despite the global financial crisis of 2008-09— sectors like capital goods, metals, oil & gas and even public sector banks outperformed the winners of the previous phase.