Thread by @hemantmanuj

It is said that the returns of stocks should be evaluated across cycles.

So, since the previous bottom (Feb 2016) till May 31, 2020, which were the best / worst stocks in #Sensex?

(CAGR, excl div)
Best

Nestle 29%
Bajaj Fin 28%
RIL 26%
Titan 24%
HUL 21%
Asian Paints 16%

(1/n)

Worst

Indusind -18%
Sun Pharma -14%
ONGC -10%
HCL Tech -9%
M&M -8%
Hero Moto -1%

Sensex + 8%

4 of the 6 best performers were consumer spending stocks. But none among the poor performers.

Ok. But how did these do over longer term?

(2/n)

Over the last 15 years till 31 May, 2020, the current Sensex stocks:

Bajaj Fin 30%
Asian Paints 25%
Kotak Mah 23%
Titan 23%
Nestle 22%
HDFC bank 19%

Sensex + 10.5%

ONGC -1.4%
Tata Steel -1.4%
NTPC +2.3%
SBI +5.8%
Hero Moto +9.7%
ICICI Bank +10.3%

What's changed?
(3/n)

Nothing much!

Consumer stocks have been doing well since long time. Not surprising because India has been a consumption driven economy.

The capital intensive firms have been losing a lot of shareholder value all throughout.

For multiple reasons.
(4/n)

The oil and steel stocks are mostly driven by systematic risks at both country and global level. Power and PSU banks have suffered at the hands of poor policies and expropriation by successive governments.

(5/n)

Consumer firms suffer less of policy and govt risks. They can allocate their capital with better visibility of returns. Market has rewarded the sector for less uncertainty.

Will the trend continue?

Never easy to forecast, but no reason for longer term trend to change. (6/n)

Disclosure:

I do not hold or have any personal interest in any of these mentioned stocks.

Sharing my thoughts just for the sake of sharing :)