Banks, IT and FMCG indices rose over 50% in 5 years of Modi sarkar; time to reshuffle?

The last five years proved to be exciting for D-Street as benchmark indices hit fresh record highs and plenty of action was seen in individual stocks as well as sectors.

Despite concerns over rising NPAs, the banking index did not show any weakness, with IT and consumption showing a strong upside. The broader market too did not disappoint investors.

The S&P BSE Banking Index rallied 94 percent followed by IT, which gained 78 percent, and FMCG, which rose 73 percent, during the last 5 years of the Modi government between May 26, 2014 and May 21, 2019.

In terms of the broader market, the Midcap index jumped 73 percent while the Smallcap index was up 60 percent compared to 57 percent rise of the Sensex during the period.

However, the power index dropped as much as 13 percent while the metal index came off by over 15 percent since May 2014, AceEquity data showed.

The next big question in front of investors – will the rally continue in the sectors which are witnessing momentum such as banking as well as consumption? This year, investors can hold on to select private banking names, followed by consumption, OMC and IT.

"Domestic consumption will remain the cornerstone of investments in Indian Markets. Consumption, select financials, oil marketing companies and niche engineering companies remain the best bet in the market," Sandip Raichura, CEO Retail, and Distribution, Prabhudas Lilladher, told Moneycontrol.

Reading the fine print from the March quarter earnings suggests that demand has slowed down, which affected the top line growth of India Inc., the credit quality of banks have improved, and margins continue to get impacted by rise in commodity prices.

"Banks have been the area of strength as the credit quality of banks has improved. Consumer sectors and auto have disappointed, pointing to a slowdown in consumption. We believe that the Indian economy should recover by Q2 FY2019-20, largely on the back of an increase in capex spending. Formation of a stable government should rekindle risk-taking, benefiting cyclical sectors- Financial services especially Banking, Capital Goods, Autos and IT should do well," Rajiv Singh, CEO, Karvy Stock Broking, told Moneycontrol.