The stock market has displayed significant activity during the April to September 2024 period, with the benchmark Nifty-50 index posting a remarkable gain of 14.91%. This solid performance has drawn attention to various sectors within the market, highlighting both strong performers and underperformers.
Despite the overall positive trend of the Nifty-50 index, several key segments have struggled to keep pace. Notably, the Nifty Oil & Gas Index, Nifty Energy Index, Nifty Private Bank Index, Nifty Bank Index, and Nifty PSU Bank Index emerged as the primary underperformers during this period.
The Nifty Oil and Gas index recorded a gain of 13.35% in the first half of FY25. However, this figure falls short of the broader market’s performance, reflecting concerns about the underlying volatility in crude oil prices.
This underperformance in the Oil & Gas index can largely be attributed to fluctuating crude oil prices. In April, Brent Crude reached a peak of $90 per barrel, only to experience a subsequent decline. The imposition of a windfall tax on upstream oil and gas producers has further complicated the market dynamics. Additionally, the performance of major oil marketing companies, such as Hindustan Petroleum Corporation, Indian Oil Corporation, and Bharat Petroleum Corporation, has been adversely affected despite their strong earnings prospects.
Similarly, the Nifty Energy Index, which gained only 11.36%, also showed weaker performance compared to the Nifty-50 index. The index encompasses various companies in the oil and gas sector, including ONGC, Indian Oil Corporation, Bharat Petroleum Corporation, as well as firms involved in power production, transmission, distribution, and green energy initiatives.
While power demand has remained robust, some stocks within the Nifty Energy Index have experienced limitations on their gains due to factors such as election-related uncertainties and adverse weather conditions like monsoon floods. These elements have created a challenging environment for energy stocks.
Banks: Key Underperformers
Within the banking sector, both the Nifty Private Bank index and Nifty Bank Index have recorded gains of 11.36% and 11.35%, respectively. Although these gains are respectable, they remain significantly lower than those of the Nifty-50 index. Investor expectations, however, remain high for a rebound in performance from private banking institutions.
On the contrary, the Nifty PSU Banks Index has faced a decline of 5.02% during the same period. Analysts highlight that while PSU banks enjoyed a strong fiscal year in 2024, they are currently in a wait-and-see mode for additional catalysts to drive growth. Many of the positive factors affecting this sector have already been priced in, leaving the market cautious.
Summary of Key Index Performances
| Index | Gain/Loss (%) |
|---|---|
| Nifty-50 | +14.91 |
| Nifty Oil & Gas | +13.35 |
| Nifty Energy | +11.36 |
| Nifty Private Bank | +11.36 |
| Nifty Bank | +11.35 |
| Nifty PSU Bank | -5.02 |
In conclusion, while the Nifty-50 index has enjoyed a substantial uptrend, it is essential for investors to note the sector-specific challenges faced by these key underperforming indices. As always, it is highly advisable for investors to remain vigilant and consult with financial experts before making any investment decisions.
