Are FMCG, IT, and Automobile Sectors India's Best Performers Since the Global Financial Crisis?
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Synopsis
Discover how sectors like FMCG, IT, and automobile have consistently delivered high returns on equity in India since 2009. This detailed report sheds light on the evolving market dynamics and the impact of global events like the pandemic and geopolitical tensions on these sectors.
Key Takeaways
- FMCG stocks have shown ROEs averaging 35.5%.
- The core sectors dominate over a third of market cap.
- Cyclicals like metals and mining have gained significantly post-pandemic.
- Gold remains resilient despite economic pressures.
- Investment opportunities in high-quality stocks may arise as valuations adjust.
New Delhi, Sep 12 (NationPress) The sectors of FMCG, IT, automobile, oil and gas, and consumer durables have emerged as some of India's most reliable sectors in delivering high returns on equity (ROE) since 2009, according to a report released on Friday.
A core group of sectors with high ROE—comprising FMCG, IT, oil and gas, and consumer durables—constitutes over one-third of the market capitalization and achieves ROEs approximately 50% higher than other sectors.
FMCG stocks listed under Nifty 50 showcased an average ROE of 35.5%, with the sector's ROE recorded at 45.4% since the global financial crisis (GFC) of 2008-2009, as per the report by DSP Mutual Fund.
Other leading sectors in terms of ROE since the GFC include IT (28.6%), automobile and auto components (22.8%), oil and gas (22.3%), and financial services (15.9%).
This consistency is a key contributor to India's premium market valuation over the long haul. However, since the onset of the pandemic, cyclical sectors like metals, mining, and construction materials have seen a significant uptick despite showing weaker long-term ROEs, the report noted.
Meanwhile, the earnings momentum within the high-ROE sectors has slowed, with revenue growth decelerating and margins appearing late-cycle.
Nevertheless, the overall market continues to trade at a premium, bolstered by cyclical sectors and lower-quality stocks.
In such a climate, the report indicates that opportunities for investment in high-quality (high ROE) sectors will eventually arise as valuations moderate.
Additionally, the report outlines that key factors impacting gold returns include the US dollar, S&P 500, Federal Reserve interest rates, and consumer price inflation. Historically, the 2000s gold rally was largely attributed to a weakening dollar.
Over the years, these influences have shifted in significance, with traditional financial metrics often posing challenges to gold's performance in recent times.
Despite these challenges, gold has demonstrated resilience, particularly driven by a structural increase in central bank demand since 2022, especially following the Russia-Ukraine conflict, where the US leveraged its currency to impose sanctions on various nations.
This scenario has paved the way for the emergence of the ‘Gold Put’, referring to the consistent, less price-sensitive accumulation of gold by central banks from different countries as an alternative to US Treasuries, the report emphasized.
Point of View
I observe that while sectors like FMCG and IT have historically provided robust returns, the shifting landscape calls for a cautious yet optimistic approach. Investors should remain vigilant in identifying opportunities in high-quality stocks as market dynamics evolve.
NationPress
13/09/2025
Frequently Asked Questions
What sectors have provided high returns on equity in India since 2009?
The sectors providing high returns on equity since 2009 include FMCG, IT, automobile, oil and gas, and consumer durables.
What is the average ROE for FMCG stocks in Nifty 50?
FMCG stocks under Nifty 50 recorded an average ROE of 35.5%.
How has the pandemic affected high-ROE sectors?
The pandemic has led to a cooling of earnings momentum in high-ROE sectors, with slowing revenue growth.
What are the key factors influencing gold returns?
Key factors influencing gold returns include the US dollar, S&P 500, Federal Reserve policy rates, and consumer price inflation.
What is the 'Gold Put'?
The 'Gold Put' refers to the consistent, less price-sensitive accumulation of gold by central banks as an alternative to US Treasuries.
