Nifty Metal was the biggest gainer of the year, up 70 per cent, driven by record-breaking rally in stocks like Tata Steel, Jindal Steel & Power and Hindalco Industries.
Shares of miners and producers of metal commodities like steel, copper and aluminium came under spotlight during the year as demand for them rose amid recovery in economic activities. Prices of the commodities soared to decadal highs, meaning revenue growth for metal companies.
However, off late, the sector has seen some profit booking as prices have cooled off. Analysts said despite subdued domestic demand, they are optimistic on stock performance mainly due to a potential demand uptick in China.
“The higher prices of iron ore and coking coal are likely to provide support to global prices, especially in the Far East. From a stock perspective, improving demand in China and attractive valuations would provide support,” said Amit Dixit of Edelweiss Financials.
Nifty Realty, another beaten down sector thanks to many insolvencies and incomplete projects, saw a lot of traction as demand for residential properties improved. Low interest rates also benefited the sector as the index climbed 54 per cent during the year.
Analysts believe the sector will continue to outperform as interest rates will remain low for a while. Moreover, demand for homes is rising in key cities at a rapid pace which is keeping the rally intact.
“We expect the real estate sector to do well for the long term, as we believe listed players keep increasing their market share in new launches and the South India market continues to do well on the back of strong new hiring from the IT sector,” said Yash Gupta, Equity Research Analyst, Angel One.
Nifty IT, another sector that is in a sweet spot, rallied 54 per cent during the year, clocking third biggest sectoral gain. The index, which boasts behemoths like TCS and Infosys as its constituents, is driving higher amid declining rupee and superb growth chart.
The earnings of Accenture have induced a new zeal among investors as they believe domestic IT companies will replicate its numbers and growth guidance driven by higher digital adoption across the world.
Other top sectoral gainers of the year were Nifty Commodities and Nifty PSU Bank, which rose about 45 per cent each. PSU banks are vying for a rerating amid talks of another round of disinvestment by the government.
The worst performing sector of the year was Nifty Private Bank. Private banks have been the darling of investors and analysts alike as everyone believes they will outshine others as India returns to growing its economy. However, the underperformance of the sector has kept returns of many of the financial-heavy portfolios subdued.