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Correlation among the returns of various sectors in 2016

·         Correlation between the Banking and the Finance sectors as well as between Power and Utilities Sector were the highest (0.96) followed by correlation between Energy and Oil & Gas sector (0.93), between Auto and Manufacturing Sector (0.9), Infrastructure and PSU Sector (0.9), Infrastructure and Power sector (0.89), Infrastructure and Utilities sector (0.89)

·         Telecom sector is least correlated with many sectors like Health care (0.32), Energy (0.34), Oil & Gas (0.34), FMCG (0.37) and Metal (0.37). Similarly Technology sector is less correlated with Health care sector (0.35) during 2016.

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Stock Market performance of various sectors in India in 2016

Sector	Mean Annual Return (%)	Annualized Std Deviation (%)	Skewness	Kurtosis
Auto	8.18	21.18	-0.29	1.58
Banking	6.58	20.77	0.18	0.79
Basic Materials	27.33	21.6	-0.63	1.76
Capital Goods	-4.41	22.76	1.07	5.62
Consumer Durables	-7.02	18.64	-0.41	1.98
Energy	14.44	17.57	-0.45	1.64
FMCG	3.25	16.02	0.06	1.81
Finance	6.38	18.61	-0.17	0.83
Healthcare	-14.25	17.29	-0.29	1.01
Infrastructure	10.49	20.38	-0.67	1.61
Manufacturing	3.21	15.77	-0.24	1.1
Metal	31.08	26.78	0.23	2.55
Oilgas	23.96	18.67	-0.22	0.6
Power	0.64	19.09	-0.8	1.91
PSU	11.48	19.15	-0.15	1.48
Realty	-8.27	30.57	-1.05	4.41
Technology	-9.45	16.32	0.09	1.71
Telecom	-24.7	22.87	-0.03	1.25
Utilities	9.1	18.13	-0.74	2.09

Analysis

·         Metal sector has shown 31.08% growth during the year followed by Basic materials (23.33%) and Oil & Gas sectors (23.96%). These three sectors along with Energy (14.44%) and PSU (11.48%) have generated stupendous growth in 2016.

·         Telecom sector has lost badly during 2016 having fallen by 24.7% in value, followed by health care sector (drop by 14.25%) and Technology sector (9.45% drop)

·         Many other core sectors like Realty, Consumer durables and capital goods have shown negative growth during the year thus impacting the market as a whole

·         Realty sector continued to be the most volatile of all sectors registering an annual standard deviation of 30.57%. Metal sector though had a big positive growth has high volatility as well (26.78%). Telecom sector also registered high volatility during the period apart from registering the worst growth during the year.

·         Manufacturing, FMCG and Technology occupied the top three slots respectively with respect to more consistent and less volatility in performance during the year 2016

·         Capital goods sector is the only sector with highly positively skewed returns where a couple of days had extremely high positive returns. Realty, Power and Utilities sectors registering high negative Skewness during the period indicating couple of days of sudden drastic fall in prices

·         Kurtosis values of Capital Goods, Realty, Metal and utilities sectors were phenomenally higher highlighting more number of extreme movements during the periods and heavy tails whereas Oil & Gas, Finance and Banking Industries had very few drastic extreme movements during the period

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