When investors ringed-in 2019, little did they know that the coming months would see indices hitting their lifetime highs during the first half of calendar year 2019 (H1CY19).

Coming with a baggage of severe liquidity crisis triggered by default at Infrastructure Leasing and Financial Services (IL&FS), domestic markets changed course every other month. Geopolitical tensions between India and Pakistan, return of the National Democratic Alliance (NDA) government for the second consecutive term amid weakening economy and renewed trade tensions between the two major world economies, the United States and China, were some of the other the defining moments for markets.

Markets scaled lifetime highs with the S&P BSE Sensex hitting the 40,000 mark for the first time ever and continued its run to 40,312 levels. On the other hand, the Nifty50 breached the 12,000 mark and hit a high of 12,103 post the outcome of the general elections.

As the first half of the calendar year draws to a close on Friday, the S&P BSE Sensex has rallied 9.7 per cent thus far (till June 26), compared to a 5 per cent rally seen in the previous corresponding period, data show. The broader Nifty50, too, has moved up 9 per cent in H1CY19 compared to 3.1 per cent rally in H1CY18.

The broader markets, however, have underperformed the frontline indices with the S&P BSE Midcap index slipping 4.1 per cent while the Smallcap index dipping 3.6 per cent. (See table 1 for BSE 500 winners and losers)

GAINERS AND LOSERS

Among various sectors, realty turned out to be the star performer, rallying 19.7 per cent in the first six months. This was followed by banking and information technology (IT) sectors that gained 14.7 per cent and 11.5 per cent, respectively.

Among banks, Nifty Private Bank index gained 12.8 per cent, while the Nifty public sector banks’ (Nifty PSU Bank) index gained only 3.15 per cent.

Thunuguntla attributes this result to cleaner balance sheets and better provisioning by bigger banks.

“Cleaner balance-sheets and higher provisioning by banks helped improve their financial performance in the March 2019 quarter.

This, in turn, helped stocks of these banks gain ground at the bourses. Axis Bank (up 27.2 per cent) and ICICI Bank (up 21.7 per cent) in the private sector and State Bank of India (up 21 per cent) in the public sector, have been able to add value to investors’ wealth due to previous provisions,” says Jagannadham Thunuguntla, head of research at Centrum Wealth.

Among the Nifty IT pack, Tata Consultancy Services (TCS), Wipro and NIIT Technologies outperformed the index rallying 19 per cent, 15.4 per cent and 15.9 per cent respectively.

Among the key losers were auto stocks. Automobiles sales, a gauge of consumption appetite in the market, dropped significantly during the year. Consequently, the scrips took the beating with the index slipping 14.6 per cent.

MARKET OUTLOOK

The liquidity issues in the financial sector and subsequent pile-up of non-performing assets (NPAs), ambiguity over the outcome of Sino-US trade dialogues, and a slump in the economy’s Gross Domestic Product (GDP) to a five-year low mark the beginning for the next six months.

That apart, the slowdown in economy and its impact on corporate earnings are also among the key factors that will have a bearing on the overall sentiment. Having scaled lifetime highs already, analysts see limited gains in the near-term.

“The market in the last four months has re-rated from 16x to 18x. So, the possibility of further re-rating is limited,” say analysts at Emkay Global Financial Services and advise investors look for sector-specific factors and avoid sectors with leveraged balance-sheets and dismal earnings.

Over the medium-term, the Union Budget proposals, outcome of G20 Summit, corporate earnings growth, pick up in auto-sales will be the key factors guiding markets over the next six months.

Analysts at Emkay believe the outlook for corporate banks and consumption remains positive, while that for automobiles is still under cloud.

“Announcements in the Union Budget are key for the revival of the auto and consumption sector as they seem under tremendous pressure,” feels Thunuguntla of Centrum Wealth.

TOP 10 GAINERS: BSE 500
Close price (Rs)	YTD change (%)
Aavas Financiers	1490.05	75.0
Adani Gas	162.20	60.8
DCM Shriram	536.90	58.9
Info Edge (India)	2217.15	54.0
Manappuram Finance	141.65	52.6
Just Dial	756.50	50.8
SRF	2979.20	49.1
Godrej Properties	960.10	47.7
Maharashtra Scooters	4632.45	46.6
Spicejet	129.25	44.9
TOP 10 LOSERS: BSE 500
Close price (Rs)	YTD change (%)
Eveready Industries (India)	79.05	-57.8
Jain Irrigation Systems	29.15	-58.2
Jaiprakash Associates	3.10	-59.7
HEG	1455.45	-60.9
Dewan Housing Finance Corporation	79.75	-68.0
Reliance Capital	70.65	-69.2
Jet Airways (India)	73.90	-73.4
Reliance Infrastructure	60.95	-80.7
Reliance Power	4.45	-84.5
Reliance Communications	1.20	-91.7
Close price on BSE as on June 26, 2019
Data source: ACE Equity