Mint Explainer: Here are the sectors driving the bull run

Indices that fuelled the rally

Key gainers that have contributed to the rally in September include PSU banks, telecommunication and technology stocks. Banks have remained the favorites of investors with improving asset quality, and rising net interest margins, while the earlier concerns around their non-performing assets (NPAs) are long behind. The same is also reflected in the rise in S&P BSE PSU index which gained around 5.4% in September while Nifty PSU Bank index rose more than 16%.

The telecom sector is another standout, with the S&P BSE Telecom index gaining more than 6% this month. Analysts cite moderating capital expenditure from FY25 and expected tariff hikes as factors that should improve free cash flow for key operators.

Information Technology stocks are also recovering, as seen in the 5-6% gains in the S&P BSE IT and S&P BSE TECK indices in September. Although global slowdown and rising interest rates had initially dampened investor sentiment towards IT, easing margin concerns and reduced cost pressures are now alleviating those fears.

Spotlight on other sectors

Those that are also in the spotlight are capital goods, realty, auto, healthcare, power, utilities and energy stocks. The auto sector continues to report good monthly sales growth figures, while declining commodity prices are positive for margins. The S&P BSE Capital Goods, S&P BSE Auto and S&P BSE Realty index have gained 3-4% during September. The good demand trajectory is driving the gains in the realty sectoral indices, while for the capital goods sector a sharp uptick in project sanctions, rising order book, green shoots on private capex recovery as well as the declining commodity prices are other key positives.

Pharmaceutical companies have benefitted from favorable export dynamics and currency movements, improving earnings prospects. The S&P BSE Healthcare index rose approximately 3.5% in September.

A surge in power demand, largely attributed to unpredictable monsoon conditions, has improved prospects for power generation and transmission companies. This is reflected in the S&P BSE Power, utilities and energy index, which has risen up to 4.5% this month.

The laggards in the markets

Metals, oil & gas, and commodities have underperformed, with only limited gains. While rising spot LNG prices have added concerns for gas distribution companies, stagnant volume growth in Q1 has done little to impress. Global slowdown concerns continue to keep prospects for oil refiners in check.

The recent rise in crude prices does not bode well for margins of oil marketing companies. Oil and gas producers should benefit from rising crude prices, but the windfall tax adjustments by the government keep a lid on their net realizations. The S&P BSE oil & Gas and Commodities index has seen limited gains of up to 2.75%.

The biggest underperformer

The Fast-Moving Consumer Goods (FMCG) sector has been the most significant underperformer, with the S&P BSE FMCG Index gaining just over 1%. Concerns over volume growth persist, as companies in the sector struggle with weak monsoon conditions, keeping investors cautious about forward growth prospects.