Monsoon worries have sent two-wheeler stocks on a tailspin in July and dampened sentiments in sectors like tractors, fast-moving consumer goods (FMCG), cement and fertilisers. However, notwithstanding the adverse monsoon effect, the market capitalisation of Nifty shot up 8.7 per cent to Rs 6.98 lakh crore, thanks to encouraging quarterly results from corporate India.
An analysis of the performance of various sectors represented in the benchmark NSE Nifty in July indicates that stocks from two-wheeler industry have shed 11.3 per cent in July, while diversified sector, led by sharp losses in HLL, plummeted 8 per cent.
As a result, the weightage of two-wheeler sector, which is represented by Hero Honda and Bajaj Auto in the Nifty in the benchmark index declined by 55 basis points, while that of diversified sector dropped by 70 basis points during the month. In contrast, a sharp surge in steel stocks in July have seen their weightage in Nifty rise by as much as 100 basis points. The duo of SAIL and Tisco buoyed steel sector and their combined market capitalisation shot up 38 per cent in July, thanks to expected continuation in the strong demand trend globally.
June quarter results show that 23 steel companies have seen a 55 per cent rise in sales and 170 per cent jump in profits as compared to the same quarter previous year. Steel was followed by stocks from sectors like shipping, power, cigarettes, gas, petrochemicals and oil-exploration, personal care, media and entertainment, housing finance and aluminium which witnessed a surge in the range of 10-22 per cent during the month.
Five shipping companies have also posted 58 per cent rise in sales and 192 per cent spurt in net profits. Besides the monsoon, sharp rise in global oil prices also weighed down the Nifty. Refinery counters were among the worst hit and the sector as a whole lost 4 per cent in market capitalisation during the month. The sector, which underperformed the Nifty by a wide margin in July, included food and food processing, hotels, banks and pharmaceuticals.