Cyclic Stocks – What are they?

In the stock market, there are companies operating in areas that can be called ‘Evergreen’. The areas are as follows:

• Pharma
• Energy & Utilities
• FMCG

What are cyclic stocks?

These stocks belong to companies that have a process of project execution requires capital expenditure(capex) and demand revival for it to show appreciation in its price. This process can exceed 4– 6 quarters (1-1.5 year)

In this process, the company goes through a period of growth with hiring, improvement in efficiency, procurements, new asset buildup for increasing the output and thereby the profit margins

Cyclic stocks in the Indian stock market:

1. Capital Goods – ABB, Siemens, CGPL, etc.
2. Metal Space Companies – Tata Steel, Hindalco, NALCO, SAIL, Vedanta, etc.
3. Cement – UltraTech, Ambuja, JK Laxmi etc.
4. Real Estate – DLF, Sunteck Realty etc.