Year-ender 2023: Gold Vs Sensex – who won the battle of nerves?

Sensex‘s December surge of over 6% or 4,118 points has brought it into the driver’s seat versus gold which enjoyed an upper hand for most of 2023. While Sensex’s year-to-date returns stand at 16.25%, Gold trails at 13.55%, having gained just 0.50% or Rs 340 per 10 grams in this month.

Both Sensex and MCX gold hit their lifetime highs of 71,106.96 and Rs 64,063, respectively, in December.

ETMarkets also analysed returns of largecap companies listed on the BSE to conclude that 65 stocks have higher returns than gold in 2023, with two stocks delivering multibagger returns of nearly 120% viz. Hindustan Aeronautics (HAL) and Zomato.

Out of these, 16 stocks gave between 50-88% returns – the highest by Tata Motors (88%) and lowest by GAIL (50.31%). NTPC, DLF, Adani Power, Varun Beverages, Larsen & Toubro, Coal India and Punjab National Bank (PNB) are stocks with returns in the above range.

The remaining 47 stocks have yielded between 49% and 14% returns. These are Power Grid Corporation, UltraTech Cement, HCL Technologies, Titan Company, ITC, Hero MotoCorp, Adani Ports and Special Economic Zone, Nestle India, Dr Reddy’s Laboratories, Maruti Suzuki, Bank of Baroda (BoB), Axis Bank, Tata Consultancy Services (TCS), Bajaj Finance, IndusInd Bank, United Spirits, Shree Cement and Britannia Industries (14.1%).

There are 31 largecap counters which have underperformed gold with over a dozen stocks delivering negative returns.
ICICI Bank, JSW Steel, Wipro, FSN E-Commerce (Nykaa), State Bank of India (SBI), Kotak Mahindra Bank, Infosys, HDFC Bank, Reliance Industries (RIL) and Hindustan Unilever (HUL) are among 18 stocks that have given positive returns but those are lower than returns by the yellow metal.
Stocks with negative returns include SBI Cards and Payment Services, Dabur India, Hindustan Zinc, Vedanta, UPL, Adani Green, Adani Enterprises, Adani Wilmar, Adani Energy Solutions and Adani Total Gas.

While these Adani Group stocks have rebounded from this year’s lows after the Hindenburg fallout, they are still in the red in comparison to the previous year.

The data on stocks’ returns correspond to the period as on December 20, 2023.

Historically, equities have displayed the potential for higher returns over extended periods compared to other asset classes like gold but they come with higher volatility and risks compared to gold, Adhil Shetty, Chief Executive Officer at Bankbazaar.com said as he cautioned investors that past performance does not guarantee future results.

While gold is a hedge against uncertainties or inflationary pressures and may not see great traction in times of economic uptrends, the performance of the Sensex is tied to the overall economic growth, corporate earnings, government policies, global market conditions, and investor sentiment, Shetty opined.

He recommends a balance portfolio that comprises equities, gold and other non-riskier investments.

“As we navigate the landscape of India’s equity markets, the resilience displayed by corporate India and the strategic opportunities in both manufacturing and services sectors are encouraging. Caution is advised in certain segments due to potential overvaluation; the fundamentals remain robust,” Kenneth Andrade Founder, Director – Old Bridge Capital Management & CIO – Old Bridge Asset Management said.

He said that excesses in the small and microcap space raise concerns, and there is an anticipation of volatility, especially in segments where valuations appear stiff. Despite these short-term challenges, the overarching trend seems to favor India, presenting a higher growth potential relative to peer countries in the region, he added.

(Inputs from Ritesh Presswala)

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)