Cyclicals to become market favourite

Mumbai: Cyclicals may become investors’ favorite bet this season, as past correlations show an impending rally based on the fact that nominal GDP growth has fallen below the 10-year G-sec yield.

Accordingly, this trend has appeared before in 2001 and then in 2009, leading to a cyclical’ 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 the current price has fallen to 6.1 percent, whereas the 10-year G-sec 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. (IANS)

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