Sectoral Gainers and Losers in August 2021

The month of August was led by the large caps as the Nifty rallied from 16,000 to 17,000 in a record time of less than a month. For the month of August, Nifty gave returns of +8.69% while the Nifty Mid-Cap index fell by -2.03% and the Nifty Small Cap fell by -2.46%. This is a reversal of the trend of the last 2 months, when mid and small caps had outperformed.

Sectoral picture of gainers and losers August 2021

Here are some key takeaways from the sectoral performance in Aug-21.

• There was a shift to defensives at higher levels of the Nifty. That explains the strong returns in FMCG, IT and even in consumer durables.

• The month belonged to heavyweights like RIL, TCS, HDFC Bank, Infosys, ICICI Bank and Hindustan Unilever. That is evident in the sectoral gainers mix also.

• The sharp rally in software at 13.42% was led by solid first quarter results, robust guidance as well as dollar strength boosting the value of IT companies.

• On the losing side, PSU banks diverged from private banks as concerns over asset quality heightened during the month, especially with the stress imposed by COVID 2.0.

• Real Estate and Metals were virtually taking a breather after a frenetic rally over the last 2 month. Both sectors were among the top performers in June and July.

• In the case of pharmaceuticals and automobiles, the subdued performance was more due to concerns over a spike in cost of inputs due to supply chain constraints.

August 2021 has been a story of two trends. The defensives attracted a lot of interest at higher levels and it was a set of heavyweight stocks that propelled the index higher.