Since March 2009, Indian stock markets are witnessing a dramatic rally after a year of plunging share prices. Various sectors in the market have performed distinctively in the current rally. While some sectors have outperformed the sensex, others have underperformed. This article analyzes the key reasons that influenced the performance of these sectors.

Indian stock markets have been witnessing a dramatic turnaround since March 2009. This is the first upward rally of the stock markets ever since the bear market in January 2008. Not only the Indian stock markets, all the major markets around the globe are rebounding after experiencing a sharp fall due to the global credit crunch and the economic slowdown. Some experts view this global stock market recovery as just a bear market rally. According to them, since the governments across the world are doling out huge amounts of money in the form of bailout packages and other initiatives, it has resulted in excess liquidity in the global financial system, leading to a recovery in the financial assets across the globe. However, there have been no signs of improvement in the economic indicators, suggesting that global economic recovery is still far away.

Whatever may be the reason, Indian investors on the stock exchanges are excited after a year of plunging stock prices. This recovery in India is distinct as most of the growth is driven by internal consumption which will act as a shield to the effects of global recession. This recovery in India has attracted the attention of the FIIs, leading to an improved performance of various sectors in the economy. Also, the newly formed government is expected to give a boost to power, realty, infrastructure and other sectors. All these have given more strength to this current rally. While some of the sectors have outperformed the sensex, others have underperformed.

The metal industry, which was on huge expansion spree during 2007 was one of the major sectors which hit a all time low in November 2008. This sector was primarily impaired due to the decrease in demand for metals globally and subsequent fall in global metal prices. Also, many of the huge metal companies that went in for expansion plans ended up with building high level of inventories. All these reasons led the metal index to plunge more than that of the sensex. Metal index fell to 4,383.38 points in November 2008 from 15,312.92 points in January 2008. However, from February 2009, the metal index has started to rise as the global metal prices stated recovering from their lows. The metal index which was at 4,690.97 in February 2009 has risen to 11,988.70 points by June 2009.

Portfolio Organizer Magazine, Stock Markets, Global Financial Systems, Financial Assets, Global Recession, Foreign Institutional Investors, FIIs, Banking Sectors, Global Financial System, Global Economic Crisis, Global Financial Sector, Telecom Sectors, Automobile Industry, Fast Moving Consumer Goods, FMCG.