Year Ended 2024: Top Performing Sectors – Nifty Realty, Pharma, IT, Auto, and PSU Banks Lead the Market

The Indian stock market in 2024 has witnessed notable volatility, but certain sectors have outperformed expectations, reflecting strong growth. Both the Nifty 50 and BSE Sensex have delivered impressive returns, with the Nifty 50 gaining 17.45% over the past year and 12.94% year-to-date (YTD). Similarly, the BSE Sensex surged by 16.88% over the past year and 12.49% YTD, highlighting a strong market recovery.

Amid this market momentum, specific sectors have led the way, notably Nifty Realty, Nifty Pharma, Nifty IT, Nifty Auto, and Nifty PSU Bank. These sectors have not only outperformed broader market indices but have also seen significant interest from investors due to their growth prospects and strong fundamentals.

In this article, we take a closer look at these top-performing sectors and their future outlook.

Top Performing Sectors in 2024

Note: The above top-performing indices have been sorted based on 1 year return. 

Overview of Top Performing Sectors in 2024

1. Nifty Realty

The Nifty Realty Index tracks the performance of real estate companies mainly involved in building residential and commercial properties.

As of December 12, 2024, at 2:00 PM, the NIFTY Realty Index was trading at 1,090.90, reflecting a minor decline of 0.54% (5.90 points). Over the past 52 weeks, it has seen a low of 722.45 and a high of 1,157.35, showcasing significant growth and volatility. On an annual basis, the index has delivered an impressive return of 48.61%.

Future Outlook for Indian Real Estate

• SEBI has approved the Real Estate Investment Trust (REIT) platform, enabling all types of investors to invest in the Indian real estate market, with potential investments worth ₹1.25 trillion (US$ 19.65 billion).
• The residential sector is likely to grow significantly under the Pradhan Mantri Awas Yojana (PMAY), which aims to build 20 million affordable urban homes by 2022, driving demand for commercial and retail office spaces.
• Urban areas face a current housing shortage of ~10 million units, with an additional 25 million affordable homes needed by 2030 to support growing urban populations.
• Increasing FDI inflows are driving transparency in the sector, with developers upgrading their systems to meet global standards. The Indian real estate market was expected to attract US$ 8 billion in FDI by FY22.

2. Nifty Pharma

The Nifty Pharma Index represents the performance and trends of India’s pharmaceutical industry.

As of December 12, 2024, at 2:32 PM, the Nifty Pharma Index stood at 22,302.60, reflecting a decline of 64.80 points or 0.29%. During the trading session, the index reached a high of 22,420.55 and a low of 22,187.75. Over the past year, the index has delivered an impressive return of 39.27%. Its 52-week range spans from a low of 15,868.15 to a high of 23,907.90.

Future Outlook for the Indian Pharmaceutical Industry

• The country holds a prominent position globally as a top producer of pharmaceuticals.
• Medicine spending in India is expected to rise by 9-12% over the next 5 years, positioning India among the top 10 nations in terms of pharmaceutical expenditure.
• Growth in domestic sales is likely to depend on companies expanding their portfolios to include chronic therapies, targeting conditions such as cardiovascular diseases, diabetes, depression, and cancer.
• Government initiatives like the National Health Protection Scheme aim to provide universal healthcare and reduce healthcare costs.

3. NIFTY IT

The Information Technology (IT) industry is a key contributor to the Indian economy. To provide a reliable benchmark for this sector, the Nifty IT index was created. It serves as a useful tool for investors and market participants to track and evaluate the performance of India’s IT industry.

As of December 12, 2024, the NIFTY IT index showed a positive trend, gaining 383.30 points (0.85%) to reach 46,002.65 by 2:46 PM. The index moved within a daily range of 45,375.50 to 46,002.65. Year-to-date (YTD) returns stand at an impressive 28.81%. Over the past 52 weeks, the index has seen a significant range, with a low of 31,320.15 and a high of 45,398.95.

Future Outlook For the Indian IT Sector

• IT spending in India is expected to grow by 11.1% in 2024, reaching US$138.6 billion from US$124.7 billion in 2023.

• India’s public cloud services market grew to US$ 3.8 billion in the first half of 2023 and is expected to reach US$ 17.8 billion by 2027.
• Cloud usage can create 14 million jobs and add US$ 380 billion to India’s GDP by 2026.
• According to an Amazon Web Services survey, India is expected to have 9 times more digitally skilled workers by 2025.

• In November 2021, Minister Piyush Goyal praised the Indian IT sector’s competitive strength without government interference.

4. Nifty Auto

The Nifty Auto Index tracks the performance of the Indian automobile sector. 

As of December 12, 2024, at 02:58 PM, the Nifty Auto Index stands at 23,851.85, down by 0.83% or 197.45 points. The index has seen a day range between 23,615.30 and 23,908.10, with a 52-week high of 27,696.10 and a low of 17,294.35. Over the past year, the index has gained 33.49%. The index opened at 23,891.80, and its previous close was 23,851.85.

Future Outlook for India’s Automobile Industry

• The electric vehicle (EV) sector is expected to create 50 million jobs by 2030.
• The Indian government has extended the PLI Scheme for the Automobile and Auto Components industry for an additional year (2023-2028). The scheme incentivises sales over five years, with disbursement in the next financial year.
• The PLI Scheme has attracted proposed investments of US$ 8.1 billion (₹67,690 crore), surpassing the original target of US$ 5.1 billion (₹42,500 crore). By December 2023, US$ 1.6 billion (₹13,037 crore) had already been invested.
• The Indian automobile sector is expected to attract US$ 8-10 billion in investments by 2023, with a potential for India to lead in shared mobility by 2030.

5. Nifty PSU Bank

The Nifty PSU Bank Index is created to represent the performance of public sector banks.

As of December 12, 2024, at 03:12 PM,  the Nifty PSU Bank index stands at 53.35, reflecting a decline of 0.75%. Over the past 52 weeks, the Nifty PSU Bank index has fluctuated between a low of 5,413.80 and a high of 8,053.30. Over the past year, the index has seen a return of 26.61%. 

Future Outlook for India’s Banking Sector

• Increased infrastructure spending, quicker project execution, and ongoing reforms are expected to boost the banking sector’s growth.
• Rapidly expanding businesses will drive demand for banking services, especially credit.
• Technology advancements, such as mobile and internet banking, AI, automation, and blockchain, are transforming the banking landscape.
• Banks are focusing on improving customer service and upgrading technology to enhance the customer experience and stay competitive.
• India has seen significant growth in fintech and microfinancing.
• Digital lending in India, which was US$ 75 billion in FY18, is projected to reach US$ 1 trillion by FY23.
• India’s fintech sector has secured US$ 29 billion in funding through over 2,000 deals, accounting for 14% of global funding.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.