FPI bullishness on major cyclical trade is petering out as Covid cases surge
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Synopsis
Capital goods manufacturers benefitted as investors perceived that vaccine rollout will result in an economic boom and a surge in industrial manufacturing.
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Foreign investors have net sold capital goods stocks worth Rs 900 crore in the past two months, NSE data showed.
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MUMBAI: After six months of consecutive buying, foreign portfolio investors have turned cautious on Indian capital goods companies over the past two months as rising Covid-19 cases shrouded India’s economic recovery in uncertainty again.
Between August and January, foreign portfolio investors net bought capital goods stocks worth Rs 13,000 crore, as portfolio investors globally rotated towards economy-linked sectors in anticipation of rollout of Covid-19 vaccines and large fiscal stimulus plans from the US.
U.S. materials index versus U.S. equity index - source: Morningstar
Trailing one year, the materials sector has massively outperformed by more than 2,380 basis points compared with 185 basis points of underperformance a quarter ago. As a result of the rally from the depths of the pandemic, just two U.S. basic materials stocks we cover now trade in 4-star territory, and no stocks trade at 5 stars.
Less than 10% of materials stocks trade at attractive discounts - source: Morningstar
Industrial gas firms’ sales held up well in 2020 despite COVID-19. Their resilient on-site businesses benefit from long-term customer agreements with fixed fees and take-or-pay clauses. We expect the sector to benefit from a rebound in merchant volumes in 2021, continued growth in the electronics end market, and strong demand for medical gases. Furthermore, we believe that industrial gas companies are well positioned to capitalize on new opportunities in green hydrogen.
The Board of Julius Berger Nigeria Plc, one of Nigeria’s leading provider of construction services, has proposed a total final dividend of N634 million to shareholders of the company for the period ended 31st December 2020.
The company’s Board made this announcement in a notification published on the website of the Nigerian Stock Exchange, stating that a dividend of 40 kobo per share will be paid on all the issued 1,584,000,000 ordinary shares of the company.
In addition to the payment of the cash dividend of 40 kobo per share, shareholders will also be issued a bonus of 1 (one) new share for every 99 (ninety-nine) existing shares held in the company.
Stock investors lost N395bn in March – NSE - Punch Newspapers punchng.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from punchng.com Daily Mail and Mail on Sunday newspapers.
Equity Market Performance
The NSE All-Share Index (ASI) which tracks the general market movement of all listed equities on the NSE, including those listed on the Alternative Securities Market (ASeM), depreciated by 1.74% at the end of the week, closing at 38,648.48 when compared to its closing unit of 39,331.61 in the prior week. This fall cumulated to a total year-to-date depreciation of 4.03% of the Index.
Besides the fall in the NSE ASI, other indices in the market followed a similar trend except for the following indices which saw some marginal increase, and the NSE Sovereign Bond Index which closed flat at the end of the week: