For the first time in six quarters, India’s quarterly GDP growth on a YoY basis came in below estimates at 6.7% for Q1FY25. This was primarily due to subdued government spending and a decline in manufacturing activity. Despite this slight moderation in short-term growth, the World Bank remains optimistic about India’s long-term growth outlook. They revised their growth projection for the current fiscal upward to 7%, from the previous estimate of 6.6%.
If we look at the equity markets, India’s influence in the MSCI Global Standard Index, also known as the World Index, has been growing rapidly. India currently holds a weightage of around 18%, second only to China, which has a weightage of approximately 25%. This marks a significant increase from levels below 10% at the end of 2020.
In this week’s Chart of the Week, we take a look at Trendlyne’s Sector Dashboard to identify the top-performing sectors over the past quarter. We focus on the top eight sectors that have delivered maximum gains, highlighting the stocks and underlying factors that have contributed the most.
Early signs of growth propel the fertilizers and software & services sectors
The fertilizers sector emerged as the best-performing sector, posting 34.1% gains over the past quarter. Average net profit growth more than doubled on a YoY basis in Q1FY25. This growth was driven by a good monsoon and initiatives taken by the government to boost the sector. For instance, the government is developing a national policy to boost local fertilizer manufacturing. The Fertilisers and Chemicals Travancore, Coromandel International and Chambal Fertilisers & Chemicals were the highest contributing stocks as they rose 41.8%, 36.6% and 28.6% respectively over the past quarter.
The software and services sector also saw significant growth, soaring 30.8% over the past quarter, driven by early signs of recovery in the IT industry. This was buoyed by demand for emerging technologies like Generative AI, machine learning and cloud transformation. Tata Consultancy Services (TCS) rose 19.7% over the past quarter driven by positive sequential growth among all verticals except media and communication. Q1FY25 marked the first positive revenue growth on a QoQ basis after four quarters of sequential decline.
IT consulting & software company Infosys saw a 34% uptick in its share price over the past quarter, accounting for 20% of the sector’s overall gain during the period. The company’s financial services segment, which contributes around 27% to the overall revenue, reported positive growth on a YoY basis after six quarters.
Retailing & consumer durables companies witness growth driven by rising demand for their products
The retailing sector has risen 29.5% over the past quarter, with Trent alone contributing 67.3% to the sector’s gains, as it surged 53.2%. Avenue Supermarts contributed 16% to the overall sector gains.
Trent posted revenue growth of 54.8% YoY to Rs 4,150 crore in Q1FY25, with net profit rising 126.3% YoY to Rs 393 crore. The company’s strategy to focus on its affordable, trend-led fashion retail store, Zudio, has been a key driver of revenue growth as consumers gravitate toward value products amid high inflation.
The consumer durables sector also recorded a 20% gain over the past quarter, supported by the “Make in India” initiative amid growing demand for electronics goods. The industry saw an average net profit growth of 45% YoY in Q1FY25. Electronics manufacturer, Dixon Technologies (India), contributed 18.4% to the overall sectoral gains after rising 42.6% over the past quarter. Similarly, Voltas, an air conditioner (AC) manufacturer gained 26.8% over the past quarter, contributing 8.5% to sectoral gains. This rise came on the back of high demand for ACs in the peak summer months from April to June.
Uptick in exports drives the pharmaceuticals & chemicals sector higher
The pharmaceuticals & biotechnology sector gained 26.7% over the past quarter. Pharmaceutical firms like Sun Pharmaceutical Industries and Lupin were the major contributors as they gained 23% and 40% respectively over the past quarter. Growth in Sun Pharma was led by global specialty sales and emerging market segments. Lupin, on the other hand, witnessed its net profit rise by 77% on a YoY basis to Rs 801 crore in Q1, driven by new product launches and improved product mix.
The chemicals and petrochemicals sector surged by 24.3% over the past quarter, as India strengthened its position in the global chemicals market. This growth was driven by increasing interest from global companies looking to source from India in a bid to de-risk their supply chains.
Leading carbon black producer, PCBL saw its stock price double over the past quarter, contributing 8% of the overall sectoral gains. This rise followed the company’s announcement to increase its global presence with capacity additions via brownfield and greenfield expansions, taking the total capacity to 10 lakh tonnes (currently, 7.7 lakh tonnes). Similarly, agrochemicals company PI Industries and specialty chemicals firm BASF India also contributed 7.7% and 6.4% to the sectoral gains over the past quarter.
Food, beverages & tobacco and FMCG companies capitalise on shifting consumption trends
The food, beverages and tobacco sector gained 21.6% over the past quarter. Cigarettes and tobacco manufacturers like ITC and Godfrey Phillips India accounted for around 50% of the sector’s gains. This growth was driven by stable cigarette taxes and enforcement against illegal trade, which helped the legal cigarette industry recover volumes. Breweries & distilleries company United Spirits also gained 25% over the past quarter driven by its premium products, and contributed over 10% to the overall sectoral gains.
Likewise, the FMCG sector gained 20.3% over the past quarter, led by moderation in raw material prices and an uptick in rural consumption. Personal products companies Hindustan Unilever and Colgate-Palmolive (India) gained significantly over the past quarter contributing over 40% to the sectoral gains.
