Sector Funds can be risky

Today’s Daily Byte

There is nervousness in the market ahead of the budget again, and rumors are circulating that some taxation changes may be coming. People are considering selling stocks that have recently surged, like defense stocks and public sector enterprises. Chaos was prevalent in the market today.

Let’s discuss the truth behind high-quality stocks from a momentum perspective..

Reading Time : 4 Minutes

Strong Top 10 weights pulling the index

A recent table from Bloomberg as of July 1 reveals interesting insights into the performance of the S&P 500. In 2024 so far, the S&P 500 has risen by 14.5%. Looking back, 2023 saw a rise of 24.2%. This pattern continues through various years, showing consistent growth in the index.

The middle column of the table shows the percentage of the S&P 500’s performance contributed by the top ten stocks. In 2024, the top ten stocks contributed a significant 77.2% of the total 14.5% performance. In 2023, the top ten stocks contributed . . . . .

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Sector Funds can be risky

Edelweiss Mutual Fund recently shared an important chart on Twitter about the returns of various sectors on a rotational basis.

The chart covers the last twelve years and includes sectors such as real estate, capital goods, auto, consumer discretionary, utilities, pharma, telecom, FMCG, IT, metal, financial services, and the Nifty 500 Total Returns Index.

The Nifty 500 Total Returns Index shows a Compound Annual Growth Rate (CAGR) of 15%. Most sectors are close to this return rate, except telecom, which has lagged in the last decade. . . . . .

Reading Time : 3 Minutes