An analysis of the performance of stocks in the Nifty 50 index has revealed that 11 of them have given positive returns in four out of the last five financial years, including the current one.
These stocks include Nestle India, Asian Paints, Axis Bank, Divi’s Laboratories, Dr. Reddy’s Laboratories, Hindustan Unilever, ICICI Bank, ITC, Larsen & Toubro, Power Grid Corp of India, and State Bank of India.
Despite the benchmark Nifty 50 giving 2% negative returns in FY23, 11 stocks in the index have given double-digit positive returns. These include HUL, ICICI Bank, ITC, L&T, Britannia Industries, Mahindra & Mahindra, NTPC, UltraTech Cement, Coal India, Eicher Motors, and IndusInd Bank.
The year FY23 started on a difficult note for markets, with Russia‘s invasion of Ukraine pushing up commodity prices and resulting in an unprecedented rise in inflation in global economies, including India. This led to central banks raising interest rates to rein in inflation, resulting in a plug on easy liquidity.
The US Federal Reserve has raised the federal funds rate by 475 basis points since March 2022, while the Reserve Bank of India has increased the benchmark repo rate by 250 bps since May 2022.
Inflation had an impact on consumption and the profitability of commodity-linked companies, but other domestic macroeconomic indicators were encouraging, putting India in a better position compared to other developing and developed economies. It’s worth noting that stocks that have managed to give double-digit positive returns in FY23 belong to the domestically-linked sectors.
On the other hand, the hike in interest rates hit consumption and raised recession concerns in developed economies like the US and Europe. This clouded the outlook of export-linked sectors such as information technology and pharmaceuticals, resulting in stocks like Divi’s Laboratories, Infosys, HCL Technologies, TCS, Tech Mahindra, ONGC, Reliance Industries, Wipro, Cipla, Hindalco Industries, and Tata Steel net losing 10-40% in FY23.