Remember market crash of 2015? One year on, 3 sectors that bounced back over 30%

Remember the trading day on Dalal Street exactly a year ago i.e. August 24, 2015? Dubbed as Black Monday of 2015, this was when Sensex crashed 1100 points, in the vein of global markets from China, Japan, and Russia to United States. At one point of the day, Sensex even plunged 1,624 points, the lowest since 2008, amid dramatic selloff triggered by Chinese markets. Many predicted it to be a start of a 2008-style global market carnage, but, one year on, Sensex has jumped over 8 per cent along with all sectoral indices barring three.

Capital goods sector and exports-driven IT and pharma sectors have yet to step back into green terrain, but sectors like metal, oil & gas and realty have bounced back up to 50 per cent since the calamitous fall they witnessed a year ago.

So what is it that drove the rally in metal, oil and realty stocks, and will it last?

Metal, realty and oil sectors are cyclical plays. They sink fastest when the economy is not in good shape, but they are the first to race ahead on first signs of economic revival. On percentage terms, the gains may appear huge but in absolute terms they just mean revert to an equilibrium price which prima facie settles at their long term valuation averages.

While the story of a recovery may be different for the three sectors, the run-up in the stock prices has been largely similar. The S&P BSE Metal gained 47 per cent, followed by S&P BSE Realty (36 per cent) and S&P BSE Oil (30 per cent).

Metal

This is why, Nitasha Shankar, Senior Vice President and Head of Research, Yes securities believes the run-up in metal counters was largely news driven and not on account of any fundamental improvement.

"Barring aluminum which has seen some signs of prices stabilizing, all other metals continue to see weakness in prices on an international basis. Add to that the lack of recovery in demand and stretched balance sheets, further run up looks improbable at these levels," said Shankar.

Realty

The real estate sector, however, looks set for larger gains in the long term. "The regulation in the realty sector and revival in the demand since last four consecutive months are sowing seeds for multiyear bull market in the sector. Supplies are getting absorbed and new construction is lethargic which is slowly creating a demand-supply gap which is the biggest positive trigger for the sector," said Jimeet Modi, CEO, SAMCO Securities.

Rohit Gadia of CapitalVia Global Research also said he does not see any reason why investor should book profit in this sector. As per the price analysis of the realty stocks, the real estate sector has more upside left, said expert.

Oil & gas

Oil and gas stocks rose as the benchmark Singapore complex gross refining margin (GRM) strengthened and crude prices also surged above $50 per barrel after breaking below $30 in January. "Now that the Singapore GRM has once again cooled off, oil and gas stocks will remain subdued," said Ankur Varman of SBICAP Securities.