What does this sharp divergence across sectors mean?
Vikas Gupta, CEO & Strategist, Omniscience Capital, said, “This data clearly shows that despite the markets not doing well at headline levels, specific sectors can do well.”
For investors in sectoral mutual funds, this highlights how sector-specific earnings growth and valuation changes can drive returns.
For example, the defence sector returns are a combination of earnings growth and PE re-rating from mid-40s to mid-50s currently. On the other hand, the PSU Banks returns are driven purely by increased earnings despite a slight PE de-rating from 8x to 7.5x.