Sector performance in 2016–17
The Indian stock market (INDA) (INDY) was mostly jittery throughout 2016. The S&P BSE Sensex fell in the first half of 2016 and was down by 4.3% in the last quarter of 2016. The S&P BSE Sensex is the most popular index in India, consisting of 30 large-cap companies across key sectors. Let’s compare the sector-wise performance of the BSE Sensex in 2016 to understand the market performance in the below chart.
Basic materials sector outperforms the market
Despite the poor performance in 2016, India’s equity benchmark reached the end of the year with a positive return of about 3%. The S&P BSE Mid-Cap Index dropped by 8.5% in 4Q16 but recorded a gain of 9.3% by the end of 2016. The S&P BSE Sensex started on a strong note in 2017 with gains of about 3.2% in March 2017. The surge was mainly driven by a massive state election victory for the ruling party. The Indian Parliament also passed the much-awaited goods and services tax (or GST) bill on April 6, 2017. The new indirect tax policies will roll out once all the states also pass the GST bill.
The S&P BSE Sensex provides investors with a variety of investment avenues. Investors can invest through a number of indexes like the sector indexes and the thematic or strategy indexes.
Performance across sector indexes
As we can see in the chart above, the S&P BSE Basic Materials Index was the top performer for 2016 with a return of about 33.5%. It was followed by the energy sector and utility sector with gains of about 19% and 12%, respectively. The resurgence in commodity prices seemed to have helped these sectors in 2016. The top gainers in the BSE Sensex in 2016 include Hindalco, Yes Bank, Tata Steel, BPCL, and Eicher Motors.
For the quarter ended March 2017, the Basic Materials sector continued to lead the pack with gains of about 20.5%.
Performance across thematic or equity strategy indexes
The Indian government’s equity holdings have performed particularly well in 2016. In 2016, the S&P BSE CPSE Index and the S&P BSE PSU Index posted gains of about 21.5% and 16.9%, respectively. The S&P BSE Enhanced Value also posted remarkable gains of about 16.6% in 2016.