Automobiles, infrastructure, capital goods, industrials, and realty were the best performing sectors in 2023, driven by the strong domestic demand, capex push by the government, and growing discretionary consumption.
Around 100 stocks belonging to the above mentioned sectors turned multibaggers in this year, data by Ace Equity showed.
Realty
The real estate sector is having its best of the times post pandemic, and that only got better despite the tight liquidity conditions amid higher interest rates. The S&P BSE Realty index topped the list of sector gainers, giving a healthy return of more than 74% year-to-date.
Seven stocks – Anant Raj Ltd, DB Realty, Prestige Estates Projects, Puravankara Ltd, Peninsula Land, and Unitech gave multibagger returns in 2023.
The ongoing economic recovery and rising demand for residential and commercial properties drove double-digit earnings growth for most companies in the sector.
Analysts expect luxury real estate projects growth to continue unabated on the back of rising spending power of the Indian upper middle class.
Further, affordable real estate is seen picking up once interest rates start trending lower from current levels and the rural economy revives.
Brokerage Motilal Oswal Financial Services is bullish on Prestige Estates and the stock is among its preferred picks in the realty space.
“We remain positive on the company’s pre-sales growth trajectory and resultant cash flows from the residential business,” analyst Pritesh Sheth said in his note on the company.
Capital Goods/Industrials/Infrastructure
The three other related sectors that grabbed the attention of Dalal Street investors are capital goods, industrials, and infrastructure.
The S&P BSE India Infrastructure, Industrials, and Capital Goods indices have rallied 57-68% so far in 2023, and scaled lifetime highs this month.
The multibagger list for these segments are quite long, with stocks giving returns of upto 1000% so far in 2023.
Much of the strong performance of stocks in these sectors this year was driven by the robust domestic macroeconomic growth, increased spending by the government, and favourable policy measures to drive Make in India.
The factors drove significant growth in order inflows for companies in the capital goods and industrials sectors.
“Government and private sector capex in the country will drive strong order book and revenue growth for the companies of the sector. We expect these sectors to look up from here led by infrastructure and real estate growth,” brokerage house HDFC Securities said.
Within this pack, two stocks that SBI Securities is bullish on are Thermax and Voltas.
Since the last three weeks, Thermax has been forming a sizeable bullish candle, and witnessing above average volumes, which indicates accumulation at lower levels, said Sudeep Shah, deputy vice president and head of technical & derivatives research at SBI Securities.
“On the upside, it is likely to test the level of Rs 3200, followed by Rs 3450 in near-term. On the downside, the Rs 2750-2700 zone will act as crucial support for the stock,” Shah said.
In the case of Voltas, Shah expects the stock to outperform in the next couple of months and Rs 1060, followed by Rs 1150 in the short-term. On the downside, the zone of Rs 810-800 is likely to provide the cushion in case of any immediate decline, he said.
Automobiles
The next domestic-linked sector that grabbed a lot of attention was automobiles and auto ancillary. The BSE Auto index has gained over 42% year-to-date, and scaled a lifetime high in trade on Monday.
Around 23 stocks in the automobile and auto ancillary space turned multibaggers in 2023, giving returns of up to 1039%.
Robust demand for passenger cars, particularly sports utility vehicles, and medium and heavy commercial vehicles, besides the government’s push to drive electric vehicle sales, kept the sector on a good stead.
The upbeat vehicle demand drove businesses for auto ancillary services, resulting in healthy earnings growth.
“The outlook for the automobile sector in 2024 is characterized by a multifaceted landscape, encompassing challenges, resilience, and strategic responses to market dynamics,” said
Dhruv Mudaraddi, analyst at Stoxbox.
“The sector outlook remains optimistic, leveraging innovative approaches and a proactive stance towards emerging trends,” he said.
The preferred picks in this space for Stoxbox are Ashok Leyland, Hero MotoCorp, and Minda Corporation.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)