Markets have seen strong signs of recovery during the two-month lockdown, with stocks belonging to pharma and chemical sectors delivering 14-100 per cent gains during this period.
An analysis of BSE500 universe shows 79 per cent (or 395 stocks) delivered positive returns, while 21 per cent (or 105 stocks) gave negative returns during the lockdown period, starting March 25.
“After the sell-off in March, the indices started reflecting concerns. Gradually, market participants became more hopeful,” said Deepak Jasani, head-retail research, HDFC Securities.
Among pharma stocks, Aurobindo Pharma has been a top performer, with over 2x returns (142 per cent gains). Among other pharma names, Cipla, Jubilant Life Sciences, Glenmark Pharmaceuticals, and Alembic Pharmaceuticals have given 66-92 per cent returns.
As many as 30 pharma stocks in the BSE500 universe have delivered more than 18.79 per cent returns posted by the index during the past two months.
Apart from Indian pharma, which is expected to gain from global health care needs in the wake of the Covid-19 pandemic, chemicals is another sector expected to gain traction from the build-up of negative perception towards China.
The top performers in the chemical pack include Nocil, Deepak Nitrite, Gujarat Alkalies and Chemicals, and Alkyl Amines Chemicals, which gained between 56 per cent and 74 per cent during the last two months.
As many as 15 chemical stocks have outperformed the BSE500 index.
“Chemical supply chain is also likely to look beyond China. The expectation is that Indian companies will benefit, given their competencies in the space,” Jasani added.
Consumer staples stocks have also delivered robust returns. Among the fast-moving consumer goods (FMCG) segment, nine stocks have outperformed the BSE500 index.
These include Parag Milk Foods (63.24 per cent), Britannia Industries (48.25 per cent), Heritage Foods (48.25 per cent), and Marico (33.4 per cent).
“FMCG stocks have given cushion, as they offered earnings visibility during the lockdown period. Companies in this sector are largely cash-rich and quite a few of them are also considered essentials,” said S Ranganathan, head of research, LKP Securities.
Meanwhile, stocks belonging to banking and non-banking financial companies (NBFCs) have been among the worst hit.
As many as 30 banking stocks have underperformed the BSE500 index. Meanwhile, as many as 35 NBFC stocks have underperformed.
“The moratorium on loans has impacted both banks and NBFCs. Further, several banking names are also in the futures and options segment, where foreign investors and arbitrageurs have built short positions in tier-2 players to take advantage of the weakness in sentiment,” added Ranganathan.
Among banking stocks, AU Small Finance Bank (-34 per cent), Bank of Baroda (minus 31.23 per cent), DCB Bank (minus 30.25 per cent), Punjab National Bank (minus 24.68 per cent), RBL Bank (minus 21.74 per cent), Karnataka Bank (minus 19 per cent), and State Bank of India (minus 16.63 per cent) have been among the worst performers in the BSE500 universe.
Among NBFC stocks, Cholamandalam Finance (minus 37 per cent), Repco Home Finance (32.79 per cent), Shriram City Union Finance (-30 per cent), IIFL Finance (minus 21 per cent), CreditAccess Grameen (minus 19.19 per cent), and Bajaj Finance (minus 19.19) have been among the worst performers.
Real estate stocks have also been under pressure, with seven stocks underperforming the BSE500 index. Sunteck Realty, Brigade Enterprises, and Oberoi Realty have given 18-25 per cent negative returns.