IBS TIMES ISSUE 228th
An Enchiridion Of Sectoral Indices
FINSTREET, IBS HYDERABAD
TEAM IBS TIMES ANWESA NAYAK (EDITOR IN CHIEF) CHAITHANYA N REDDY (SENIOR EDITOR WEBSITE) PAYEL CHOWDHURY (SENIOR EDITOR MAGAZINE) ANANT RAI AYUSHI JAIN H K AISHWARYA UNGARALA ISHA KRISHNA SANKET TIWARI SHIBASRADHA NAHAK SRIRAM RATHI
DESIGNED BY ANWESA NAYAK CHAITHANYA N REDDY
EDITOR'S NOTE Finstreet IBS is an ICFAI Business school Hyderabad affiliated official capital market club which aims to research the capital market as a whole. At IBS Times we serve our readers information from in and around the world and keep them up to date. We try to aid our readers with information and gauge knowledge with better investment solutions. IBS Times encompasses an independent writers club with unbiased thought and wholesome views, fairness, and honesty. We have recognized that our work can influence decisions or perceptions of our readers towards the capital market. Therefore, we commit to publishing our magazines and journals with the highest level of accuracy and impartiality. We strive to be humble and subtle in carrying out this work. Our team realizes that accuracy in the context provided to readers is imperative. Thus, we always strive to reach that level as best as we can. This Magazine edition focuses on different Stock Market Indexes. The indices can be a great tool to monitor sectors in the economy and make sectorrelated trades. Let’s take a deep dive and look into different sectoral indices and understand some of the companies that are available for trading in the market. But choose wisely!! As with high returns comes high risk. As an Editor, it gives me immense pleasure to hear from our readers. We intend to improve ourselves at every stage and would like to invite our readers to support the same. Keep following us on www.finstreetibshyd.in as well as. Please write to us and become a part of the discussion. E-mail ID: editor.ibstimes@gmail.com Payel Chowdhury (Senior Editor, Magazine) POC, Team IBS Times.
CONTENTS INTRODUCTION TO SECTORAL INDICES NIFTY PHARMA - ANWESA NAYAK
NIFTY HEALTHCARE - CHAITHANYA N REDDY
NIFTY METAL
- H K AISHWARYA UNGARALA
NIFTY IT
- ISHA KRISHNA
NIFTY FMCG
- PAYEL CHOWDHURY
NIFTY BANK - SANKET TIWARI
NIFTY OIL & GAS - SHIBASRADHA NAHAK
NIFTY CONSUMER DURABLES - SRIRAM RATHI
INTRODUCTION TO SECTORAL INDICES Sectoral indices are specially curated indexes that summarise specific industries or sectors. It enables investors to compare a stock to specific industries. Every trading company operates in a specific economic sector. Businesses that sell a similar product or service will be grouped with it. By categorising businesses and the economy, investors can conduct in-depth analyses of how the economy as a whole is performing. Energy, services, healthcare, consumer products, industrial, materials, utilities, technology & communications, and financial sector indices are examples. A sectoral stock index is essentially a barometer that reflects the overall state of the markets or the sector it represents. Indices are extremely useful for determining the general direction in which the market appears to be moving. It assists investors in selecting appropriate stocks for investment and serves as a benchmark against which their performance can be measured. One can evaluate the performance of a stock portfolio by determining whether it outperforms the index by providing higher returns than the index or whether it underperforms by providing lower returns than the index. Because an index is usually made up of companies that are grouped together based on some factor, it serves as a peer comparison parameter. For example, one can determine which bank in the Nifty PSU bank index has delivered the highest returns over the last year. The ability of indices to reflect investor sentiment is one of their most important advantages. It is a well-known fact that investor sentiment has a significant impact on stock price because it directly influences demand. Indices are also a useful tool for passive investors who want to reduce the cost and time required to conduct research in order to select the most appropriate stocks based on their risk tolerance and goals. As a result, they build a portfolio of stocks that track a specific index in order to replicate the index's returns, or they invest in index ETFs (Exchange-traded Funds). Overall, indices are extremely important as a representative or benchmark of a specific sector or the entire market as a whole, and they serve as a very useful tool for investors to assess a wide range of factors, from the performance of their portfolio to the impact of a specific event on market performance.
NIFTY PHARMA
- Anwesa Nayak
India is a prominent and expanding player in the global medicines industry. India is the world's largest provider of generic pharmaceuticals, supplying over 60% of global immunisation demand and accounting for 20% of global supply by volume. The Indian pharmaceutical industry is worth US$ 42 billion and ranks 3rd in volume and 13th in value globally. There are 3,000 pharmaceutical companies and 10,500 manufacturing units in the country. Indian pharmaceuticals are preferred internationally due to their low cost and good quality, earning the country the title of "Pharmacy of the World". The pharmaceutical industry currently accounts for 1.72% of the country's GDP. In the foreseeable future, pharmaceutical outsourcing to India and low-cost healthcare services are likely to be important growth areas. The domestic pharmaceutical market in India is expected to be worth US$ 42 billion in 2021, rising to US$ 65 billion by 2024 and US$ 120-130 billion by 2030. The market grew 17.7% annually in August 2021, up from 13.7% in July 2020. According to India Ratings & Research, revenue in the Indian pharmaceutical market is predicted to increase by more than 12% year on year in FY22. The Nifty Pharma Index was created by NSE Indices to track the performance of firms in the pharmaceutical industry.
Portfolio Characteristics Methodology
Periodic Capped Free Float
No. of Constituents
20
Launch Date
July 01, 2005
Base Date
January 01, 2001
Base Value
1000
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
The NIFTY Pharma Index is calculated using the free-float market capitalization approach, in which the index level reflects the total free-float market value of all the companies in the index in comparison to a specific base market capitalization value. At the time of rebalancing, the weightage of each stock in the index is calculated based on its free-float market capitalization, with no single stock having a weightage of more than 33% and the top three stocks having a weightage of more than 62%. The NIFTY Pharma Index can be used to benchmark fund portfolios and establish index funds, ETFs, and structured products, among other things.
The NIFTY Pharma Index is made up of 20 Indian firms that are listed on the National Stock Exchange (NSE). Name of the company
Weightage in the Index (%)
Sun Pharmaceutical Industries Ltd.
22.07
Divi's Laboratories Ltd.
12.53
Cipla Ltd.
11.74
Dr Reddy's Laboratories Ltd.
11.66
Laurus Labs Ltd.
5.17
Aurobindo Pharma Ltd.
4.20
Lupin Ltd.
4.02
Alkem Laboratories Ltd.
3.97
Gland Pharma Ltd.
3.84
Biocon Ltd.
3.42
Ipca Laboratories Ltd.
3.26
Torrent Pharmaceutical Ltd
3.06
Abbot India Ltd.
2.10
Zydus Lifesciences
1.99
NATCO Pharma Ltd.
1.57
Pfizer Ltd.
1.51
Glenmark Pharmaceutical Ltd.
1.48
Granules India Ltd.
0.97
Alembic Pharmaceuticals Ltd.
0.94
Strides Pharma Science Ltd.
0.49
The Pharma Index's Top Constituents Sun Pharmaceutical Industries Ltd., Dr Reddy's Laboratories Ltd., Divi's Laboratories Ltd., and Cipla Ltd. are the greatest contributors to the index, accounting for 70.5% of the total. Sun Pharma is the largest constituent of the Nifty Pharma Index, with a weightage of 22.07%. It has a market capitalization of Rs 221,554.59 crore. Over a three-year period, the stock achieved a 103.73% return, compared to 42.47% for Nifty Pharma. In three years, SUNPHARMA's Return on Equity is expected to be poor (15.4%), but the projected profits growth (15.7% per year) is higher than the savings rate (6.7%).
It is followed by Divis Laboratories Ltd. which has a weightage of 12.53%. DIVISLAB's expected earnings growth (8.8% per year) is higher than the savings rate (6.7%). The Return on Equity of DIVIS LAB (25.9%) is regarded as high. The company's strong balance sheet and recent stock price correction make it a smart long-term investment. Cipla Ltd. is the third company by weight to be included in the NIFTY Pharma index. Over a three-year period, the stock returned 73.0%t, while Nifty Pharma returned 42.47% to investors. Cipla Ltd appears to be a good quality firm based on its financial track record over the last ten years. Dr Reddy's Laboratories Ltd. has the fourth-largest weightage in the Pharma Index. Over the last three years, Dr Reddy's has been able to produce a compounded revenue growth of 10% and a compounded profit growth of 30% in terms of profitability. Over the same time, the company had a strong ROE of 13% on average. Among its peers, Dr Reddy has one of the highest ROCE.
Index Analysis Index Returns (%)
QTD
YTD
1 Year
5 Years
Since Inception
Price Return
-4.49
-4.49
10.69
5.46
13.06
Total Return
-4.26
-4.26
11.43
6.21
14.08
A graph of returns since inception
For the last 2 decades, the Pharma Index has produced a total return of 12% CAGR. The graph above shows returns from 2001 until 2022.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
17.66
22.24
20.50
Correlation (with NIFTY 50)
0.45
0.52
0.62
BETA
0.50
0.62
0.57
The standard deviation has decreased over the last five years in comparison to the prior year, indicating that the index is stable enough to minimise volatility while dealing with supply and demand factors. When it comes to volatility, this index is less volatile, with a beta value of less than 1, making it the greatest index investment among others.
Fundamental Analysis P/E
33.0
P/B
4.85
Dividend Yield
0.68
A PE ratio of 33.0 shows that the Index's constituent stocks are expensive for an investor, suggesting that for every rupee of profit, an investor must spend Rs 33. NIFTY Pharma has a higher PB ratio than NIFTY 50 (4.37), which indicates that the company's shares are worth 4.85 times more than what is written in their books.
Why Investors Should Invest in the Pharma Index? The pharmaceutical sector is expected to be the first line of defence against these uncertainties, given the rising incidence of previously unknown diseases and the coming threat of climate change (the impacts of which are still unknown). As a result, the pharmaceutical industry's longterm prospects are bright. The pharmaceutical industry has always adapted to changes in global demand and technical breakthroughs. The pharmaceutical sector is now working around the clock to develop vaccines for coronavirus. There is a slew of other factors that will have an impact on pharmaceutical companies in this digital age. Artificial intelligence on a wide scale, supply chain technology innovation, medical marijuana legalisation, big data and analytics precision medicine, extended reality, and so on are all examples.
The key advantage of pharmaceutical firms in India is the cheap cost of production, which offers a stimulus for lower costs in research and development, making it one of the finest investment options. Pharmaceutical companies, despite their volatility, maybe intriguing to long-term investors. Because of the industry's expanding size and the fact that healthcare is becoming a more vital element of people's lives, investors who invest at the right time will profit handsomely. Furthermore, as an ever-evolving business, many pharmaceutical companies benefit from innovation, scientific breakthroughs, and technology advancements.
NIFTY HEALTHCARE
- Chaithanya N Reddy
Introduction Healthcare has grown to become one of India's most prominent industries, both in terms of revenue and labour. The healthcare industry includes hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The Indian healthcare system is expanding rapidly as a result of improved coverage, services, and increased spending by both public and private entities. The stock exchanges – NSE and BSE – have established numerous indexes to gauge the performance of various industries. The Nifty Healthcare Index is used by the NSE to monitor the healthcare sector's performance. The Nifty Healthcare index includes companies that manufacture pharmaceuticals, diagnostics, medical equipment and tools, as well as those that operate hospitals. It is made up of a maximum of 20 National Stock Exchange-listed stocks. Criteria for Eligibility: Stocks must meet the following eligibility criteria to be included in the Nifty Healthcare index. Stocks that are a component of or will be a part of the Nifty 500 index at the time of review. A complete list of basic industries that are eligible to be included in this index are as follows: Biotechnology, Healthcare Research, Analytics & Technology, Healthcare Service Provider, Hospital, Medical Equipment & Supplies, Pharmaceuticals and Pharmacy Retail. Stock selection will be accomplished in two steps: 1. At the time of review, the top 20 companies based on six-month average free-float market capitalization that are available for trading in the NSE's Futures & Options (F&O) segment are chosen to comprise the index. 2. If the number of stocks chosen in Step 1 is less than 20, a deficit number of stocks is chosen based on the average free-float market capitalization for the previous six months.
Portfolio Characteristics Methodology
Periodic capped free-float
No. of Constituents
20
Launch Date
November 18, 2020
Base Date
April 01, 2005
Base Value
1000
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
The Nifty Healthcare Index is calculated using the free-float market capitalization approach. The stock weights will be rebalanced quarterly, starting on the final trading day of March, June, September, and December whereas the index will be rebalanced semi-annually, with effect from the final trading day of March and September.
Top Constituents of the Index Name of the company
Weightage in the Index (%)
Sun Pharmaceutical Industries Ltd.
20.88
Divi's Laboratories Ltd.
11.95
Cipla Ltd.
10.55
Dr. Reddy's Laboratories Ltd.
10.45
Apollo Hospitals Enterprise Ltd.
9.47
Sun Pharmaceutical has the highest weightage in the index which accounts for 20.88%. The company has a market capitalization of ₹216,060.11 crores. For the past three years, the company has shown a good profit growth of 91.30%. The company's interest coverage ratio is 9.38, which can be considered healthy. With a Cash Conversion Cycle of 51.53 days, the organisation is very efficient. Divi’ Laboratories has the second-highest weightage, 11.95%, in the index. For the past three years, the company's profit has increased by 31.00% with revenue growth of 21.23%. The company has maintained a strong ROE & ROCE of 21.13% and 28.31% respectively for the last three years. The company is almost debt-free. It is followed by Cipla Ltd with a weightage of 10.55% in the index. For the past three years, the company has shown a good profit growth of 18.90% while its debt has been reduced by $6.06 million. The company has an interest coverage ratio of 75.34, which indicates that it is in good shape. With a current ratio of 3.79, the company has a strong liquidity position.
Index Analysis Index Returns (%)
QTD
YTD
1 Year
5 Year
Since Inception
Price Return
-0.71
-6.21
4.25
8.28
13.27
Total Return
-0.71
-5.99
4.88
9.08
14.25
A graph of returns since inception
Though we see some steep upward and downward trends in Healthcare, it can be observed that there is an overall growth over the past decade. The index managed to give an average return of 9% over the period of 5 years along with a total return of 14.25% since inception. With global healthcare spending expected to grow at a CAGR of 5% from 2019 to 2023, there will be plenty of opportunities for the industry. While there will be uncertainties, stakeholders can prepare for them by considering historical and current drivers of change when planning for 2022 and beyond.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
17.41
20.15
19.26
Correlation (with NIFTY 50)
0.57
0.55
0.66
BETA
0.62
0.59
0.57
The standard deviation of the Nifty Healthcare Index for 1 year is 17.41. The correlation of the index with NIFTY 50 is in the range of 0.50 to 0.70 since inception indicating that the trend between these two indexes might be similar. The Beta value of the Nifty Healthcare Index is 0.6 indicating that it is less volatile than the market, ie, NIFTY 50.
Fundamental Analysis P/E
33.42
P/B
5.35
Dividend Yield
0.63
The PE ratio of the Index is 33.42 which indicates that an investor has to pay ₹33.42 for each rupee of profit earned. The Nifty Healthcare Index has a PB ratio of 5.35 which is higher than the PB ratio of NIFTY 50 (4.37).
Why Should Investors Invest in the Healthcare Index? Healthcare is a sector that must constantly innovate in order to stay relevant. These advancements cover a wide range of topics, including diagnostics, treatment processes, and patient treatment methods. As a result, there is an ongoing demand for healthcare investment. The ability of this industry is demonstrated in the fact that the Nifty Healthcare Index has outperformed the benchmark Nifty 50 Index in the past. As healthcare infrastructure encompasses a wide range of activities connected to providing healthcare services, there are numerous companies to consider investing in. Given the abundance of possibilities, it is difficult for the average investor to recognize and invest in firms that have the potential to perform better. Since an individual investor cannot invest directly in an index or have their portfolio cluttered with all of the index's member companies, mutual fund houses now offer passive investment options that mimic various indexes. Hence, investors can go ahead and invest in such ETFs easily. Nonetheless, investors should conduct adequate research before making an investment.
NIFTY METAL
- H K Aishwarya Ungarala
With a crude steel output of 9.8 MT in October 2021, India is the world's second-largest producer of crude steel, the fourth largest iron ore producer, and the largest sponge iron producer. The output of crude steel and finished steel in FY22 (till January) was 98.39 MT and 92.82 MT, respectively. Due to increased consumer demand, India's crude steel output is expected to expand by 18% in FY22, reaching 120 million tonnes. The availability of raw resources such as iron ore and low-cost labour in India has fueled the rise of the Indian steel industry. As a result, the steel industry has made a significant contribution to India's industrial output. According to the 2017 National Steel Policy, 300 million tones of manufacturing capacity will be available by 2030-31. Steel usage per capita has risen from 57.6 kg to 74.1 kg during the previous five years. The government has set a goal of raising rural steel consumption from 19.6 kilograms per capita to 38 kilograms per capita by 2030-31. India is the world's second-largest coal producer, with total coal output of 716.08 MT in 2020-21. When compared to the same time in 2019, India's total coal output climbed by 6.74% to 74.78 MT in December 2021.
Portfolio Characteristics Methodology
Periodic Capped Free Float
No. of Constituents
15
Launch Date
July 12, 2011
Base Date
January 01, 2004
Base Value
1000
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
The NIFTY Metal Index is meant to represent the Metals sector's behaviour and performance (including mining). The NIFTY Metal Index is made up of up to 15 stocks listed on the National Stock Exchange (NSE). The level of the NIFTY Metal Index is determined using the free-float market capitalization approach, in which the entire free-float market value of all the companies in the index is compared to a certain base market capitalization value. It is used to benchmark fund portfolios and create index funds, ETFs, and structured products, among other things. The free-float market capitalization will be used to make the final selection of enterprises for Nifty metal. At the time of rebalancing, the weighting of each stock in the index is computed based on its free-float market capitalization, with no single stock weighing more than 33% and the top three stocks weighing no more than 62%. The index is rebalanced semi-annually. The deadlines are January 31 and July 31 of each year, respectively. The average data for the six months before the cut-off date is used in the semi-annual evaluation of indexes.
Top Constituents of the Index Name of the Company
Weightage in the Index (%)
Tata Steel Ltd.
22.59
Hindalco Industries Ltd
15.54
JSW Steel Ltd.
15.49
Adani Enterprises Ltd.
14.13
Vedanta Ltd.
10.04
Jindal Steel & Power Ltd
4.86
NMDC Ltd.
4.05
APL Apollo Tubes Ltd.
3.27
Steel Authority of India Ltd.
3.08
National Aluminium Co. Ltd
2.08
Tata Steel is one of the world's largest steel producers, with an annual crude steel capacity of 34 million tonnes. With international activities and commercial presence. It is one of the most geographically diverse steel producers in the world. In the financial year ended March 31, 2021, the group had a turnover of Rs 1.6 Trillion. After Steel Authority of India Ltd, it is India's secondlargest steel firm with an annual capacity of 13 million tonnes. The shares of the company are currently being traded at Rs.1288. Hindalco Industries Limited is a subsidiary of the Aditya Birla Group that produces aluminium and copper in India. It is one of the world's major aluminium rolling firms, as well as one of Asia's leading primary aluminium manufacturers. In the financial year 2021, Hindalco Industries recorded total sales of 43,351 crores and a profit of 993 crores. The shares of the company are currently being traded at Rs.461.45. JSW Steel Ltd is a Mumbai-based global steel producer that is part of the JSW Group. JSW Steel became India's second-largest private sector steel business after merging with ISPAT Steel. The firm currently has an installed capacity of 18 MTPA and its shares are currently traded at Rs.707.95.
Top Performing Companies Company Name
CMP
Mkt Cap (Cr)
P:E Ratio
SAIL
94.10
38.87T
2.97
National Aluminium
101.05
18.57T
6.51
Tata Steel
1284.50
1.57L
3.88
Coal India
185.95
1.15L
13.89
Vedanta
405.05
1.50L
8.06
Adani Enterprises is a holding company that is primarily involved in the mining and selling of coal and iron ore on a standalone basis, as well as serving as an incubator for the Adani Group's new business projects. Adani Wilmar (food processing), Adani Airport Holdings (airport operations), and Adani Road Transport (road development) are its three primary subsidiaries. The shares of the company are currently being traded at Rs.2247.90. Vedanta Limited is an Indian multinational mining firm with activities in iron ore, gold, and aluminium mines in Goa, Karnataka, Rajasthan, and Odisha. The company earned a revenue of ₹91,442.00 crores for FY 2021 with a net income of ₹11,602.00 crores while holding ₹183,482.00 crores worth of assets. The shares of the company are currently being traded at Rs.406.3.
Nifty Metal Returns Index Returns (%)
QTD
YTD
1 YEAR 5 YEARS
SINCE INCEPTION
Price Return
-1.50 14.59
30.51
16.30
10.58
Total Return
-1.50 15.60
33.81
18.85
12.87
A graph of returns since inception
Though there we some steep upward and downward Trends in Nifty Metal, there is an overall growth over the past decade. With the publication of the National Mineral Policy in 2019 and the Mines and Minerals (Development and Regulation) Amendment Act 2021, there occurred a significant growth in this sector. Though there was a temporary downfall due to the covid pandemic in 2020, it quickly picked up due to various government reforms such as the Make in India Campaign, Smart Cities, Rural Electrification, and a focus on building renewable energy projects under the National Electricity Policy, as well as increased infrastructure development. Since the start of 2022, the Nifty Metal index has outpaced the benchmark Nifty 50 by 17%, due to the increased commodity prices. This indicated that the Nifty metal is performing well in the prevailing market conditions.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
30.73
30.33
35.12
Correlation (with NIFTY 50)
0.60
0.71
0.79
BETA
1.18
1.14
1.23
P/E
6.92
P/B
2.49
The correlation coefficient gives the relation between Nifty 50 and Nifty metal. According to the data, both these indices are positively correlated. This means that with the increase in Nifty50, Nifty metal increases and vice versa. Beta measures the projected movement of a stock in relation to the wider market. If the beta is more than 1.0, it means the stock is more volatile than the overall market. PE ratio measures the market price divided by earnings per share. Any PE ratio below 15 is considered cheap. This means the Nifty metal is trading at a considerably low price as compared to its earnings. PB ratio measures the market value to the book value. PB value below 3 is considered good for investing.
Why Should Investors Invest in the Metal Index? With various government initiatives such as the make in India Campaign, Smart Cities, Rural Electrification, etc, the demand for metals and minerals has greatly increased. Iron ore, bauxite, chromium, manganese ore, barite, rare earth, and mineral salts were always abundant in India. With the outbreak of the Ukraine war the demand had enhanced multiple folds. China, a major exporter of aluminium, has curtailed its production in order to reduce its carbon footprints. This opened new doors for the Indian metal Industry. Metal nifty companies such as Tata steel, JWS steel, Jindal steel, and power Ltd started investing billions of dollars to enhance their operating capacity. Therefore investing in Nifty metal today could reap huge profits in the future.
NIFTY IT
- Isha Krishna
The Indian economy relies heavily on the Information Technology (IT) industry. The NIFTY IT sector index was created to provide a good benchmark for the Indian IT sector. The index, which consists of 10 companies listed on the National Stock Exchange, measures the performance of Indian IT firms (NSE). The index is intended to reflect the behaviour of businesses engaged in software development, hardware, and IT infrastructure, among other things. It can be used for a variety of things, including benchmarking fund portfolios, creating index funds, ETFs, and structured products, among other things. The NIFTY IT index is calculated using the free-float market capitalization method, with a base date of January 1, 1996, and a base value of 1000, with the index level reflecting the entire freefloat market value of all the companies in the index relative to a specific base market capitalization value. With effect from May 28, 2004, the index's base value was changed from 1000 to 100.
Portfolio Characteristics Methodology
Periodic Capped Free Float
No. of Constituents
10
Base Date
January 1, 1996
Base Value
100
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
In April, the Nifty IT index fell over 13%, driven down by lackluster results from leading IT heavyweights as well as high valuations. Heavyweights like Infosys, MindTree, Tech Mahindra, Wipro, L&T Technology Services, and others, which were down 10-20% in the last month, led to the significant drop in IT equities. However, with the recent double-digit fall in April, certain IT stocks are only looking decent in the long run. The NIFTY IT Index of ten Indian companies that are publicly traded on the National Stock Exchange (NSE).
The Nifty IT Index's Top Constituents Name of the Company
Weightage in the Index (%)
Tata Consultancy Services Ltd.
29.33
Infosys Ltd.
22.73
HCL Technologies Ltd.
10.02
Tech Mahindra Ltd.
9.53
Wipro Ltd.
9.53
MindTree Ltd.
5.69
NIIT Technologies Ltd.
5.36
Hexaware Technologies Ltd.
3.18
Tata Elxsi Ltd.
2.43
Justdial Ltd.
2.18
The largest contributors to the index, accounting for 71.61% of the total, are Tata Consultancy Services Ltd., Infosys Ltd., HCL Technologies Ltd., and Tech Mahindra Ltd. Tata Consultancy Services specializes in IT solutions. It has a market capitalization of 1,285,904.40 crores and a return on equity of 42.99%. Revenue increased by 9.1% over three years, net profit increased by 6.8%, and operating profit increased by 10.3%. TCS was an outperformer in the last month, rising 84.2% vs the NIFTY 50, which fell by -7.1%. It is a stock with average price momentum and valuation and medium financial performance. Infosys Limited is a company that specializes in business consulting, technology, engineering, and outsourcing. It has a market capitalization of 666,831.18 crores and a 29.34% ROE, with a weightage of 22.73%. Revenue growth of 13.1% over three years, net profit of 12.8%, and operating profit of 16.0%. In the previous month, Infosys has underperformed the NIFTY 50, falling -14.83% while the NIFTY 50 has fallen -7.1%. Infosys is a stock with average price momentum and valuation and medium financial performance. HCL Technologies Ltd is a global leader in IT services. With a market capitalization of 290,918.47 crores, the corporation has a weightage of 10.02%. It has a return on equity of 21.80%. HCL's three-year CAGR growth in sales is 12.2%, with a 10.1% net profit and a 13.8% operating profit. In the last month, HCL has lost -10.32% vs the NIFTY 50, which has lost -7.1%. HCL is a stock with a strong financial track record and a fair to costly valuation.
Tech Mahindra Ltd., with a weightage of 9.53%, is a prominent Telecom focused provider of IT Services & Solutions to the Global Telecommunication Industry. It has a market value of Rs 122,791.06 crore and a return on investment of 17.81%. Revenue growth of 6.3% over three years, net profit of 5.2%, and operating profit of 13.0%. In the last month, Tech Mahindra has lost -15.16% vs. the NIFTY 50, which has lost -7.1%. The company pays substantial dividends, with rising dividend yields over the last five years, and has increased revenue every quarter for the past four quarters, making it a stock with strong financial performance and a good to premium valuation.
Index Analysis Index Returns (%)
QTD
YTD
1 Year 5 Years
Since Inception
Price Return
-12.93 -18.29
23.21
26.03
24.42
Total Return
-12.7
25.47
28.57
-
-17.9
A graph of returns since inception
For the last 25 years, the Nifty IT index has returned a 24% compound annual growth rate (CAGR). Return from 1997 to 2021 is depicted in the graph above.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
20.72
21.98
34.27
Correlation (with NIFTY 50)
0.96
0.63
0.66
BETA
0.91
0.73
0.96
The standard deviation has reduced over the last five years compared to the previous year, indicating that the index is steady enough to deal with supply and demand concerns while minimizing volatility. This index is less volatile than others in terms of volatility, with a beta value of less than 1, making it the best index investment.
Fundamental Analysis P/E
29.93
P/B
9.75
Dividend Yield
1.8
A PE ratio of 29.93 indicates that the INDEX's component stocks are expensive for an investor, implying that an investor must pay Rs 29.93 for every rupee of profit. The PB ratio of NIFTY IT is higher than that of NIFTY 50 (4.37), indicating that the company's shares are worth 9.75 times what is written.
Why Should Investors Invest in the IT Index? NIFTY IT provides an adequate benchmark for investors and market intermediaries to measure the performance of the Indian IT market. During this uncertain period, when companies are struggling to maintain revenue, the IT sector has impressed investors with double-digit growth in this industry, where the inflow of demand from clients due to the pandemic is firming up the earnings of companies such as TCS, HCL, Infosys, Wipro, and MindTree. Although it is tough to time the market, long-term success has been attained by investors who stick to a strategy and invest with a long-term perspective. As a result, investors should be optimistic about the current innovation, and those who wish to gain exposure to these companies and participate in their growth should do so in a systematic manner. Investors with a three-year investment horizon should consider investing in the sector. This is because digital is expected to drive growth in the short term, which is good news for the industry. Individual stock investment, on the other hand, necessitates a great deal of knowledge and experience. The IT industry is particularly challenging because it is always evolving and at a quick speed. Retail investors may find it challenging to keep up with the current developments. As a result, IT ETFs or investing in an IT index may be suitable financial opportunities for investors.
NIFTY FMCG
- Payel Chowdhury
The fast-moving consumer goods (FMCG) sector is India's fourth-largest, with household and personal care accounting for half of FMCG sales in the country. Increased awareness, easier access, and changing lifestyles have been key growth drivers for the sector. Despite nationwide lockdowns, the Indian FMCG industry grew by 16% in CY21, a 9-year high, driven by consumption-led growth and value expansion from higher product prices, particularly for staples. During the period 2015-20, final consumption expenditure increased at a CAGR of 5.2%. From US$ 110 billion in 2020, the FMCG market in India is expected to grow at a CAGR of 14.9% to reach US$ 220 billion by 2025. The Indian processed food market is expected to grow to US$ 470 billion by 2025, from $263 billion in 2019-20.
Portfolio Characteristics Methodology
Periodic Capped Free Float
No. of Constituents
17
Launch Date
September 22, 1999
Base Date
January 01, 1996
Base Value
1000
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
The NIFTY FMCG Index, which was launched on September 22, 1999, with a base date of January 1, 1996, and an index value of 1000, is intended to reflect the behaviour and performance of FMCGs, which are non-durable, mass consumption products that are available off the shelf. The NIFTY FMCG Index is calculated using the free-float market capitalization method, in which the index level reflects the total free-float market value of all stocks in the index relative to a specific base market capitalization value. At the time of rebalancing, which is done semi-annually, the weightage of each stock in the index is calculated based on its freefloat market capitalization, so that no single stock is more than 33% and the weightage of the top three stocks cumulatively is not more than 62%. The NIFTY FMCG Index can be used to benchmark fund portfolios, and launch index funds, ETFs, and structured products, among other things. The NIFTY FMCG Index is comprised of 15 FMCG stocks that are traded on the National Stock Exchange (NSE).
Name of the Company
Weightage in the Index (%)
ITC
28.95
Hindustan Unilever Ltd.
24.14
Nestle India Ltd.
8.18
Tata Consumer Products Ltd.
6.64
Britannia Industries Ltd.
5.39
Dabur India Ltd.
4.46
Godrej Consumer Products Ltd.
4.03
United Spirits Ltd.
3.77
Marico Ltd.
3.71
Colgate Palmolive (India) Ltd.
2.93
Varun Beverages Ltd.
2.03
Procter & Gamble Hygiene & Health Care Ltd.
1.93
United Breweries Ltd.
1.52
Emami Ltd.
1.3
Radico Khaitan Ltd
1.01
ITC Limited has the highest weightage in the index, accounting for 28.95% of the total weightage. When comparing the company's track record over the last ten years, it can be stated that it is a good quality company, and the key valuation ratios appear to indicate that it is somewhat undervalued and is likely to rise in the short term. The company's ROE has increased to 24.20% on average over the last three years. It is followed by Hindustan Unilever Limited, which has a weightage of 24.14%. At Wednesday's closing price of Rs 2144, HUL saw a 17% increase in the FMCG stock. It was of the opinion that, while near-term headwinds dampened earnings expectations, 4QFY22 results were above expectations. Although HUL's flat volume performance in 4QFY22 was disappointing, the company continues to deliver well on consistent premiumization and category development, enhanced digital capabilities such as e-commerce salience, D2C brands, and improved reach (Shikhar) – digital demand capture has a 20%+ salience. Nestle India Ltd is the third company by weight to be included in the NIFTY FMCG index. Longterm growth narratives for the company's revenue and earnings are very appealing. In India, the packaged foods segment offers enormous growth potential. This is especially true for a company with a strong pedigree and distribution strength, such as Nestle. The company's recent success in implementing its volume-led growth strategy gives it confidence in execution and can be a worthy inclusion in the investor’s portfolio.
Top Performing Companies Company Name
CMP
Mkt Cap (Cr)
5Y Profit Growth
Hindustan Unilever Ltd
2234.85
525098
13.07
Godrej Consumer Products Ltd.
784
80006
12.47
United Breweries Ltd.
1586.35
41932
10.61
Jubilant Food Works Ltd.
545.8
36027
18.3
Nestle India Ltd.
18319.5
176732
10.56
Index Analysis Index Returns (%)
QTD
YTD
1YEAR
5YEAR
SINCE INCEPTION
Price Return
-3.44 -3.44
3.88
9.04
14.65
Total Return
-2.76 -2.76
6.15
10.83
16.56
A graph of returns since inception
Over the last few years, investors have flocked to fast-moving consumer goods (FMCG) stocks, often at ostensibly high valuations, due to a focus on quality and high return ratios. However, with commodity prices rising due to a variety of macroeconomic and geopolitical issues, these firms are likely to face margin pressure in the coming quarters. The large difference in performance between the Nifty FMCG index and the broader Nifty 50 Index demonstrates these stocks' underperformance relative to the broader markets. During the same time period, FMCG behemoth Hindustan Unilever saw a 10% drop in its stock. The Nifty 50 has risen 17.04% year to date, compared to 3.88% for the Nifty FMCG index. However, the index has provided a 15% return since its inception.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
14.43
17.66
22.26
Correlation (with NIFTY 50)
0.71
0.71
0.73
BETA
0.64
0.67
0.69
P/E
37.78
P/B
9.1
The Index has a correlation greater than 0 and less than 1 with respect to the broader NIFTY 50. This means although both the Indexes move in tandem, NIFTY 50 rises or falls faster than NIFTY FMCG which gives the investor an edge over the downtrodden market conditions. A BETA value of 0.6 indicates that the Index is less volatile than the market i.e., NIFTY 50. The Nifty FMCG PE AND PB ratio is currently calculated by taking into account earnings (including profits and losses) reported by each index constituent in the preceding four quarters of standalone financials. A PE ratio of 37.78 indicates that the constituent stocks of the INDEX are expensive for an investor, implying that an investor must pay Rs37.78 for a rupee of profit. NIFTY FMCG has a higher PB ratio than NIFTY 50 (4.37). A high P/B ratio indicates that the market values a company's shares far more than its assets. This could be due to the company's location in the services industry, where human capital is more prevalent than fixed assets. It could also imply that people are paying a premium to book value because of a high return on assets (ROA). However, in some cases, a high P/B ratio may be a red flag, indicating that the stock is overvalued.
Why Should Investors Invest in the FMCG Index? Regardless of how the economy is doing, demand for consumer goods remains stable. As a result, the sector is regarded as defensive, which means that its stocks are in high demand and trade at a premium to the market. In addition, over the last three years, the FMCG sector has outperformed the index. This may mislead investors into believing that FMCG stocks always provide higher returns. Many factors contributed to this performance, including government policies, a surge in demand for defensive stocks due to a drop in investment spending, and lower commodity prices. What investors should remember is that there have been similar times when FMCG has underperformed. Purchasing quality stocks at a reasonable price is a good way to avoid purchasing overpriced stocks.
The next question to consider is how an investor can invest in the FMCG Index. There is no single index fund or ETF that can provide exposure to all FMCG companies. One strategy is to purchase specific stocks of key FMCG companies in proportion to their weights in an index such as the Sensex. Another option is to invest in funds such as Nippon India Consumption, BNP Paribas India Consumption, ICICI Pru Bharat Consumption, and Mirae Asset Great Consumer to gain exposure. Nevertheless, investors should do thorough research before investing. Inter and Intra sectoral diversification is the key to a healthy portfolio. As famously said by Bill Ackman, “Diversification covers up ignorance”.
NIFTY BANK
- Sanket Tiwari
Nifty Bank, or Bank Nifty, is an index comprised of the most liquid and large capitalised Indian banking stocks. It gives investors a benchmark for the capital market performance of Indian bank stocks. The index has 12 stocks from the banking sector. Bank Nifty, like others, is computed using the free-float market capitalization method. NIFTY Bank Total Returns Index or Bank Nifty TRI is one of its index variants. The index was launched in 2003. The top stocks of the index include HDFC Bank Ltd. 31.61%, ICICI Bank Ltd. 18.20%, Axis Bank Ltd. 13.02%, Kotak Mahindra Bank Ltd. 12.74% and State Bank of India 10.92%.
Portfolio Characteristics Methodology
Periodic Capped Free Float
No. of Constituents
12
Launch Date
September 15, 2003
Base Date
January 01, 2000
Base Value
1000
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
The NIFTY BANK Index, which was launched on September 15, 2003, Bank Nifty Index is computed using free-float adjusting market capitalization with a base date of January 1, 2000, indexed to a base value of 1000. The Index level directly reflects the value of all the stocks in that Index. This Index comprises 12 state-owned and private sector banks. Like the Nifty, those bullish on banks can buy Bank Nifty futures comprising 25 shares, or buy a call option on Bank Nifty. Bears can similarly short or sell Bank Nifty futures or buy a put option on the index. Bank Nifty is one of the important Index and the first choice of FIIs and DIIs. The movement in this index depends on the strength of index shares and moves parallel with banking stocks. The Bank Index composition does not remain the same always as the stocks which do not perform and leads to a fall in their market capitalization are replaced by other banks which perform and have their market cap more than these under-performers. The right, but not the obligation, to buy or sell a specific futures contract at a specific price (Strike Price) on or before a specific expiration date is represented by an option contract. The contract between two parties in which the buyer receives a privilege for which he pays a premium and the seller accepts an obligation for which he receives a fee is known as an option. Traders can trade Through the Bank Option contract, which is European style and cash settlements, based on the Bank Index.
Name of the Company
Weightage in the Index (%)
HDFC Bank Ltd.
27.04
ICICI Bank Limited
23.03
Kotak Mahindra Bank Ltd.
11.72
State Bank Limited
11.27
Axis Bank Ltd.
11.18
IndusInd Bank Ltd.
5.58
AU Small Finance Bank Ltd.
2.69
Bandhan Bank Ltd.
1.98
Bank Of Baroda
1.84
Federal Bank Ltd.
1.68
HDFC Bank has the highest weightage in the index, as it holds 27.04% weightage in Bank nifty. It means if HDFC bank moves by 1%, say 20 points then Bank Nifty will be moved by 0.27% which is around 80 points, as per current bank nifty prices. HDFC has always been the first choice of FIIs and DIIs which may give massive returns in the coming future. HDFC Banks's ROE has increased to 16.64% on average over the last three years. Recently the merger was commenced between HDFC and HDFC Bank and that will bring HDFC to the top 5 Banks across the globe and will be the largest private bank in India. It is followed by ICICI Bank, which has a weightage of 23.03%. As per the 7th May closing price of Rs 719.25, ICICI saw -a 1.31% decrease in share price. It is seen, that RBI has hiked the interest rate, Q4FY22 results were also great. Although ICICI is one of the leading banks in India, it’s the second choice of FIIs and DIIs. Kotak Mahindra Bank is the third bank by weightage to be included in the NIFTY Bank index, recently the bank has raised the interest on the existing FDs by 0.35% as RBI increased the interest rate by 0.40 and there is negative foreign funds outflow.
Top Performing Companies Company Name
CMP
Mkt Cap (Cr)
HDFC Bank Ltd.
1335.00
7,30,98,518.35
ICICI Bank Limited
720.75
4,96,14,015.61
Kotak Mahindra Bank Ltd.
1780.85
3,53,37,894.97
State Bank Limited
477.40
4,25,39,160.88
Axis Bank Ltd.
692.50
2,07,30,497.27
Index Analysis Index Returns (%)
QTD YTD 1YEAR 5YEAR
SINCE INCEPTION
Price Return
-0.78 1.71 10.09
10.05
17.41
Total Return
-0.78 1.71 10.48
10.46
19.00
A graph of returns since inception
In the last few years, investors are much more interested to trade in the future, and Options and traders make huge wealth out of it. Bank Nifty has always been a volatile index, any changes in the policies have a huge impact on the Banking stocks which makes the Index of Bank Nifty quite volatile. Within two to three minutes five hundred points go either up or down. The large difference in performance between the Nifty Bank index and the broader Nifty 50 Index demonstrates these stocks' underperformance relative to the broader markets. During the same time, Banks have shown a dropdown in their stock price. The Nifty 50 has risen 10.76% year to date, compared to 4.69% for the Nifty Bank Index.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
21.07
25.89
29.75
Correlation (with NIFTY 50)
0.86
0.90
0.84
BETA
1.15
1.23
1.09
P/E
19.53
P/B
2.69
The Index has a correlation is greater than 0 and less than 1 with respect to the broader NIFTY 50. This means although both the Indexes move in tandem, NIFTY Bank rises or falls faster than NIFTY 50 which gives the investor an edge to trade and book profits faster. A BETA value of 1.15 indicates that the Index is highly volatile than the market i.e., NIFTY 50.
Nifty Bank’s PE and PB ratio is currently calculated by taking into account earnings (including profits and losses) reported by each index constituent in the preceding four quarters of standalone financials. A PE ratio of 18.30 indicates that the constituent stocks of the INDEX are not much expensive for an investor for F&O, implying that an investor must pay Rs 18.30 for a rupee of profit. NIFTY BANK has a lower PB ratio (2.58) than NIFTY 50 (4.3). A high P/B ratio indicates that the market values a company's shares for more than its assets. However, in some cases, a high P/B ratio may be a red flag, indicating that the stock is overvalued. All major big giant companies of India constitute the Nifty 50 Index.
Why Should Investors Invest in the NIFTY Bank Index? Considering the current economic conditions globally. The market is negative because of global sentiments and increase in Bank rates by RBI. As a result, the sector is in a consolidation zone and will take time to recover but this becomes an opportunity for retail investors to buy bank shares which are available at discount and hold for years. Banking is the strongest industry in every country which makes the economy strongest. Many factors also contributed to the performance of Bank Nifty, including government policies, and a surge in demand for banking stocks. Investors should understand that there has been a time when banking was not performing well. We can purchase quality stocks at a discounted price when the market is down and that’s a correct way to avoid impulse purchases during Bull Run. Here the question comes, how an investor can invest in the Banking Index. We can invest in the best quality stocks of the banking sector which have less debt and should have >55% Promoter Holdings and >25% of FIIs & DIIs holdings. These holdings within the bank make share prices blow up as they act as key drivers for the Banking sector. HDFC, ICICI, Kotak and Axis Bank are the best shares to buy at every dip and keep accumulating them in your portfolio as these shares give dividends also with the hike in share price. As it is wisely said by the biggest investor of the world i.e., Mr Warren Buffet investors should do research thoroughly before investing in any stock and once bought should not be sold for at least 5 years. Pro Tip: We should always do our due diligence before investing in any company and compare it with other stocks of the same industry, to have a brief understanding of where the company stands. Analyse the stocks, understand their fundamentals, Read the technical charts and absorb the emotions in the market for specific industries and that’s what makes you a PRO Investor. “Stock Market is just a Psychological and Patience Game, if you can control your emotions, definitely you will end up making profits from this market.”
NIFTY OIL & GAS
- Shibasradha Nahak
Nifty Oil & Gas is one of the most well-known indexes on the NSE, and its primary purpose is to highlight the performance and total returns of listed Oil, Gas, and Petroleum firms. With India's refineries ranking second in Asia, it is critical to supply refined fuels to keep the economy afloat. Traders and investors use the Nifty Oil & Gas index to predict the performance of petrochemical company equities. Because India is an energy-hungry country, there is a high probability that consumption will rise from 4.76 million barrels per day to 5.15 million barrels per day. And, these changes can be easily noticed on the balance sheet of listed oil & gas companies. Crude and natural gas are non-renewable energy sources that are heavily weighted in this index because of supply and demand dynamics in the international market.
Portfolio Characteristics Methodology
Periodic Capped Free Float
No. of Constituents
15
Launch Date
15-Jan-20
Base Date
01-04-2005
Base Value
1000
Calculation Frequency
Real-Time
Index Rebalancing
Semi-Annually
The Oil & Gas index is made up of 15 of the major firms in the oil, gas, and petroleum industries that are listed on the National Stock Exchange. And, it follows a methodology of periodic capped free float which depicts that the higher market cap stocks have higher weightage and give leverage to the oil & gas index. Because it is a commodity-driven index, the data is always calculated in real-time and updated in response to changes in the global market.
Index Analysis Index Returns (%)
QTD YTD 1 YEAR
5YEAR
SINCE INCEPTION
Price Return
7.04 7.04
27.95
13.41
12.89
Total Return
7.88 7.88
31.27
16.24
15.51
Fundamental Analysis P/E
8.68
P/B
2.14
Dividend Yield (%)
4.05
The index has given a decent return of 13.41 in a tenure of 5 years excluding dividends. In a high inflation market, the index has given a return of 31.27% which indicates that the surge in demand for oil & gas can provide leveraged returns to its shareholders. One of the major reasons to invest in the Oil and Gas index is to get a high dividend yield, and it acts as a passive income source. So, an increase in earnings of the company can directly reflect your returns from the investment. The index is trading at a P/E of 8.68 which indicates that the investors are willing to pay 8 times more than the EPS. The only reason which would be withdrawn is that they are essential commodities that are required to function in day-to-day life, therefore these corporations will benefit in any case. The oil & Gas Index is trading at a P/B of 2.14 which depicts that the companies are valued as much as 2.14 times more than what is present in their books. So, as an investor, we can get multiple buying opportunities when the stocks are trading at an undervalued phase.
A graph of returns since inception
Top Constituents by Weightage Name of the Company
Weightage in the Index (%)
Reliance Industries Ltd.
33.3
ONGC Ltd.
13.61
Adani Total Gas Ltd.
13.45
BPCL Ltd.
7.81
IOCL Ltd.
6.88
GAIL Ltd.
6.45
HPCL Ltd.
3.91
Petronet LNG Ltd.
3.31
Indraprastha Gas Ltd.
2.97
Gujarat Gas Ltd.
1.97
The largest conglomerate, Reliance Industries, is a petrochemical and hydrocarbon powerhouse. It is engaged in the exploration, production, refining, marketing, and sale of petroleum and other crude oil by-products such as diesel, LPG, aviation fuel, and naphtha. And, this single stock carries a higher weightage in the index which is 33.3%. ONGC (Oil and Natural Gas Corporation) is one of the major corporations in the crude oil and gas industry. It is heavily divided into crude oil and natural gas development, production, and refinement. Also, being the second most valuable in terms of weightage in the index makes this stock an outperformer in the index over the years. Adani total Gas a sub-group of the Adani conglomerate has diversified in this business to supply the Piped Natural Gas (PNG) to the Industrial, Commercial, Domestic (residential), and Compressed Natural Gas (CNG) to the transport sector. This widespread business made this stock constituent 13.45% of the market share in the oil & gas index, also with the emerging economy, this stock can show the magic of compounding.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
18.66
22.90
24.73
Correlation (with NIFTY 50)
0.73
0.78
0.85
BETA
0.86
0.95
0.94
Co-relating Nifty 50 and Nifty Oil & Gas returns, both of the indexes are providing the same returns, which indicates that there is a high weightage of Oil &gas on Nifty 50, and with variability in demand and supply it can upsurge to multi-fold returns. While looking at volatility, this index is less volatile as its beta value of less than 1, which makes this index investment as best one among others, also keeping interim and yearly dividends can lure an investor as it acts as a passive income for the investor. The standard deviation has decreased over the 5-years as compared to the previous year, which implies that the index is stable enough to crunch the volatility while dealing with the supply and demand factor point-of-view.
Conclusion In any time-period resources are going to play the most crucial for human life roll-out, and in the future, the consumption will ramp up which will directly lead to a surge in demand for nonrenewable resources. So, with limited resources, the demand factor is going to rise and this will directly impact the balance sheet of these Oil & Gas stocks in a positive manner. So, holding these stocks or investing in oil & gas index funds can give you multi-fold returns with passive income intact for investors. “So, are you going to lighten up your portfolio with Oil & Gas?”
NIFTY CONSUMER DURABLES
- Sriram Rathi
Consumer durables are a type of consumer goods that do not need to be replaced regularly because it lasts for a long time. Televisions, refrigerators, air conditioners, and washing machines are among the durable products and appliances sold by the Consumer Durables industry. This category includes telephones as well as kitchen gadgets such as microwave ovens. Several factors, including the rising retail boom, real estate and housing demand, increased disposable income, and an overall increase in the degree of wealth of a substantial portion of the population, have all aided the sector's expansion in recent years. BPL, Videocon, Voltas, Blue Star, MIRC Electronics, Titan, Whirlpool, and others are among the leading foreign and domestic participants in the business. Consumer Electronics and Consumer Appliances are the two primary categories that make up the consumer durables industry. Changes in purchase behaviour are key economic indicators since consumer durables account for a significant share of durable goods sales. Because durables are often large-ticket things, customers buy them only when they are certain they can afford them. Durable goods sales drop sharply in the runup to a recession when consumers have less faith in the economy. This is crucial to remember while investing in durable goods companies and studying the present economy.
Portfolio Characteristics Methodology
Periodic Capped free float
No. of Consituents
15
Launch date
January 15, 2020
Base date
April 01, 2005
Base value
1000
Calculation frequency
Real-time
Index Rebalancing
Semi-Annually
The Nifty Consumer Durables Index is intended to reflect the performance and behaviour of companies in the Consumer Durables industry. A maximum of 15 tradable, exchange-listed businesses make up the Nifty Consumer Durables Index. The Nifty Consumer Durables Index is calculated using the free-float market capitalization approach, in which the index's level reflects the entire free-float market value of all the index's stocks in relation to a specific base market capitalization value. The Nifty Consumer Durables Index can be used to benchmark fund portfolios, and launch index funds, ETFs, and structured products, among other things.
Top Constituents by Weightage Company name
Weightage in the Index (%)
Titan company Ltd.
31.08
Havells India Ltd.
13.57
Voltas Ltd.
12.07
Crompton Greaves Consumer Electricals Ltd.
9.46
Dixon Technologies (India) Ltd.
6.68
Bata India Ltd .
4.86
Kajariya Ceramics Ltd.
3.53
Rajesh Exports Ltd.
3.53
Relaxo footware Ltd.
3.22
Blue Star Ltd.
2.76
Titan Business Ltd., founded in 1984, is a Large Cap company in the Gems & Jewellery industry with a market capitalization of Rs 211,874.61 crore. For the year ending 31-Mar-2021, Titan Company Ltd.'s primary Products/Revenue Segments include Jewellery, Watches, Gold, Eyewear, Traded Goods, Precious & Semi-Precious Stones, Other Operating Revenue, and Other Services. The company reported a Consolidated Total Income of Rs 10,094.00 Crore for the quarter ended December 31, 2021, up 33.73% from the previous quarter's Total Income of Rs 7,548.00 Crore and up 31.79% from the same period last year's Total Income of Rs 7,659.00 Crore. In the most recent quarter, the company generated a net profit after tax of Rs 1,012.00 crore. Havells India Ltd., founded in 1983, is a Large Cap business in the Consumer Durables sector with a market capitalization of Rs 80,783.70 crore. Cables, Electrical Consumer Durables, Traded Goods, Domestic Switchgears, Light Fittings & Fixtures, Others and Export Incentives are some of Havells India Ltd.'s primary products/revenue segments for the year ending 31-Mar-2021. The company reported a Consolidated Total Income of Rs 3,713.05 crore for the quarter ended December 31, 2021, up 13.50% from the previous quarter's Total Income of Rs 3,271.33 crore and up 15.52% from the same quarter last year's Total Income of Rs 3,214.24 crore. In the most recent quarter, the company generated a net profit after tax of Rs 305.82 crore. Voltas Ltd., founded in 1954, is a Large Cap business in the Consumer Durables category with a market capitalization of Rs 40,730.26 crore. Electrical Goods, Contract Revenue, Sale of Services, Other Operating Revenue, and Scrap are the primary products/revenue segments for Voltas Ltd. for the year ending 31-Mar-2021.
The company reported a Consolidated Total Income of Rs 1,822.34 Crore for the quarter ended December 31, 2021, up 4.89% from the previous quarter's Total Income of Rs 1,737.35 Crore but down 10.94% from the same quarter last year's Total Income of Rs 2,046.26 Crore. In the most recent quarter, the company generated a net profit after tax of Rs 128.56 crore.
Top Performing Companies Company Name
CMP
Mkt Cap (Cr)
Whirlpool India Ltd.
1628.1
20,646
Voltas Ltd.
1173.1
38,713
Bajaj Electric
1100
12,636
IFB Industries
945.35
3,829
Crompton Greaves Consumer Electricals
375.7
23,795
Index Analysis Index Return (%) QTD YTD 1 YEAR 5 YEAR SINCE INCEPTION Price Return
1.4 -5.55
32.1
21.63
21.41
Total Return
1.4 -5.55 32.56
22.24
22.37
A graph of returns since inception
Index Re-Balancing: On a semi-annual basis, the index is rebalanced. The deadlines are January 31 and July 31 of each year, respectively. The average data for the six months preceding the cut-off date is used in the semi-annual evaluation of indices. The Market is provided four weeks' notice from the date of the modification.
Index Governance: All NSE indices are managed by a professional crew. The NSE Indices Limited Board of Directors, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee make up a three-tier governance structure.
Technical Analysis Statistics
1 Year
5 Years
Since Inception
Standard Deviation
19.24
20.69
25.03
Correlation (with NIFTY 50)
0.71
0.71
0.71
BETA
0.88
0.78
0.8
P/E
64.18
P/B
13.66
In comparison to the larger NIFTY 50, the Index exhibits a correlation of greater than 0 but less than I. This means that, despite the fact that both Indexes move in lockstep, NIFTY 50 rises or falls quicker than NIFTY consumer durables, giving the investor an advantage in a down market. A BETA score of 0.88 shows that the Index is less variable than the market, specifically the NIFTY 50. The Nifty consumer durables PE AND PB ratio is currently calculated using earnings, profits, and losses recorded by each index constituent in the prior four quarters of standalone financials. A PE ratio of 64.18 implies that the INDEX component companies are costly for an investor, meaning that a rupee of profit is worth Rs64.18.
Conclusion Despite massive losses in 2019, the Indian Stock Market has come around to bullish momentum since the commencement of the Covid-19-led epidemic. The Nifty indices on the NSE are all performing well in terms of providing returns to investors. In terms of providing consistent returns, the S&P CNX Nifty 50 has been the benchmark index. In terms of trading, Bank Nifty, Nifty IT, Nifty Pharma, and Nifty Consumer Durables are the most active indices on the NSE. After examining all of these indices in this study, it was discovered that S&P CNX Nifty 50 movements have a significant impact on Nifty IT and Nifty Consumer Durables. Their coefficients of correlation are 0.546 and 0.446, respectively.S&P CNX Bank Nifty and Nifty Pharma have the least influence on Nifty because they are most influenced by industry movements and good news across goods, businesses, and markets.
FINANCIAL TRIVIA Money For Thought Investing in index funds is one way to mimic index returns. Index funds' popularity has skyrocketed in the last two decades, with investors shifting hundreds of billions of dollars from actively managed to passively managed funds every year. The most obvious advantage of investing in index funds is that your portfolio is instantly diversified, reducing the likelihood of losing some or all of your money. Another significant advantage of investing in index funds is that the costs, including taxes and management fees, may be lower than those associated with other types of investment funds. Luckily Choosing the best sectors to invest in for future returns does not require chance or extensive research. All it takes is a quick look at trends and some research into past performance. Investors can look forward to investing in sectors such as health care, technology, and consumer discretionary. However, before investing, novice traders should investigate the company's and the sector's financials. The IBS Times is an academic print and not for any commercial sale. Reliability and responsibility for sources of data for the articles vests with respective authors. Please feel free to drop any suggestions or any feedback at editor.ibstimes@gmail.com
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