Look out for the headwinds before investing in beaten down sectors

After being in the positive territory since the start of the fiscal year till August-end, when leading indices touched all-time highs, the S&P BSE Sensex has shed over 10 per cent. In the backdrop of a worsening current account deficit, default by IL&FS and muted sentiment, investors have hit the exit button.

Among the top sectors in terms of market value that bore the brunt of the Rs 20.2 trillion market sell-off, and have lost more than the Sensex, is non-banking financial companies. Rising interest costs, worries over loan growth and worsening credit risk have been an overhang on these companies.

The other sector that lost investor fancy is automobiles, with its market capitalisation down about 22 per cent over the last two months, as muted volume growth has put a question mark over the double-digit growth assumptions. Investors in the oil and gas segment, too, have been on the losing side. The other two laggards are fast moving consumer goods and cement due to muted demand trends and higher input costs. 

While the steep corrections have brought valuations lower, investors have to be watchful, as headwinds such as weak consumer sentiment, rising crude oil prices, a falling rupee and higher interest rates continue to be major bugbears.

Here's a sector-wise analysis:

Indian banks now have the advantage over crisis-hit NBFCs, say analysts

Maruti to Tata Motors, auto companies bank on festive cheer to boost sales

Cement stocks: Street hopeful of a better future driven by pricing gains

FMCG stocks trip on high valuations; analysts see further correction

Oil and gas stocks: High crude prices, weakening rupee pull down sentiment