CHART OF THE WEEK 📈
With a 3% rise, the Nifty 50’s performance was lacklustre in 2022. However, the year 2022 was marked by divergence.
While the Indian markets ended the year up 3%, the US was down 33%, the UK was up 1% and China was down 15%. India did fare better than most other countries
The markets fell by 15% in the first half of the year, and then rose 19% in the second half of the year. If you just invested somewhere in the middle of the year, you’d have made decent money
Stocks in the sectors of Banking, Metals and Consumer Goods did extremely well, rising by 17-67% in 2022, whereas IT, Consumer Durables and Real Estate were the worst-performing sectors, down by 12-27%
Score: 2022
Banks Are Raking In
Topping the charts this year was the Nifty PSU Bank index giving out an astonishing return of 67%. Yup, banks are doing really well! Private banks are not far behind, with a return of 18% in the last year
Strong credit growth despite rate hikes and better spreads was the primary driver of the banking rally in 2022
FMCG Surprise
Intuitively, FMCG companies get impacted by high inflation as demand slows down, price increases become difficult to take, and input cost prices rise. However, strong consumption continued despite high inflation, and the impact on FMCG companies wasn't all that much
The sector has bounced back post-pandemic, astonishing everyone with a 17% return YTD
Fuel for Inflation
High inflation is usually driven by higher food and commodity prices. Global supply issues resulted in higher prices for commodities across the board, naturally also boosting the price of Metal and Oil & Gas stocks
With inflation levels breaking all records this year, sectors such as Oil & Gas and Metals have had a healthy year
Buying Houses Yet?
With interest rates rising, fears increased of lesser people taking loans, especially of a high-ticket size, to buy houses. This would further be exacerbated by higher interest payments and cash-flow-strain for debt-heavy real estate companies
Naturally, the real estate index was one of the worst-performing sectors, down by 12% in 2022
IT Ain't Got It
IT got the short end of the stick with -27% returns YTD
The major reason is a looming recession in its core markets (the US and Europe), which is expected to slow demand down