BSE Sensex and Nifty50 declined more than 3% during the last month, witnessing the worst performance in the month of May since 2012.
Nifty ended in the red for four out of the last five months. In May, the 50-share index dropped 518 points and the Sensex plunged 1,494.46 points.
Weakness in the market comes on the back of a combination of global as well as domestic factors. The ongoing Russian-Ukraine war continues to keep investors on the edge, while global central banks, especially the US Federal Reserve, tightening monetary policies to combat multi-decade high inflation, leading massive outflow of foreign capital from domestic markets.
Persistent selling by foreign institutional investors (FPI) in the Indian equity market also reached new heights during the month as the monthly net outflow of foreign capital stood at more than Rs 54,000 crore, the second-biggest monthly outflow since March 2020. This was the eighth consecutive month of net selling from foreign investors in Indian equities.
Barring Nifty Auto and Nifty FMCG, all the sectoral indices declined in May. Here are the sectors that were the worst performers in May.
The metal stocks witnessed a sharp selloff in May with the index crashing over 15% during the month, its sharpest monthly fall since March 2020. The steep fall in the Nifty Metal index comes after the government decided to impose an export duty on steel.
Steel stocks underwent sharp correction after the government announcement as the prospects of falling utilisation and declining steel prices loom ahead for the steel companies. The Nifty Metal index is down more than 21% from its peak scaled in April this year.
Nifty Energy plunged more than 10% in May, its worst monthly performance since March 2020.
Adani Green Energy, Adani Transmission, Bharat Petroleum Corporation Ltd, Indian Oil Corporation and Tata Power were among the top losers from the Nifty energy index for the month.
Realty stocks such as Indiabulls Real Estate, Oberoi Realty, Sobha and Godrej Properties were down 14-18% in May. As per reports, the real estate sector has seen foreign capital outflows of $245 million. The Nifty Realty index declined more than 7% in May.
The real estate sector in the country has been reeling under cost pressures with the prices of key raw materials such as steel, cement, copper and aluminium surging along with high fuel prices.
The IT services companies also witnessed heavy beating during the month with the Nifty IT index falling over 6%. Mindtree, L&T Technology Services, L&T Infotech, Coforge, Mphasis, among others contributed to most of the losses in the sectors.
The Nifty IT index is down more than 23% so far in 2022, underperforming the benchmark index Nifty. The sector faces multiple headwinds at macro and micro levels including economic growth slowdown, revenue and margin pressures. Most of the IT players have missed consensus growth expectations.
Nifty Pharma declined more than 6% in May with Divi’s Laboratories, Lupin, Aurobindo Pharma, Ipca Laboratories, Gland Pharma, Biocon and Glenmark Pharmaceuticals among the top losers. Nifty Pharma is down over 12% YTD.
Nifty Auto rallied more than 4% during the month of May, witnessing a second consecutive month of rally. TVS Motor Company, Balkrishna Industries, Mahindra & Mahindra, Hero MotoCorp and Ashok Leyland were among the top contributors to the sector.
The gains in auto stocks were seen on the back of hopes of improving rural demand, the government’s steps to reduce steel prices and efforts to ease supply-chain bottlenecks which are expected to ease margin pressures for the industry.
The fast-moving consumer goods (FMCG) sector also gained over a percent in May. Britannia Industries, Hindustan Unilever and Marico rose the most during the month. Expectations of a normal monsoon have improved the outlook for rural demand, a major driver of volumes for FMCG companies.