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Cyclicals to become market favourite as upswing expected

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Mumbai, Dec 20 (IANS) Cyclicals may become investors’ favourite bet this season, as past correlations show an impending rally based on the fact that nominal GDP growth has fallen below the 10-year Gsec yield.

Accordingly, this trend has appeared before in 2001 and then in 2009, leading to a cyclicals’ rally. In market parlance, cyclical stocks are those whose trajectory closely follows the economy’s different phases such as expansion and recession.

Sectors like cement, steel and capital goods represent cyclical stocks. At present, the growth rate of India’s nominal GDP or GDP measured at current price has fallen to 6.1 per cent, whereas the 10-year Gsec yield ranges above Rs 6.25.

According to Edelweiss Professional Investor Research’s Chief Market Strategist Sahil Kapoor this trend should coincide with monetary policy easing and revival in global growth.



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