Which sector will create new lows in next correction?

People might get surprised by the title of this post since nobody is talking of any correction in the stock markets right now. When the Sensex went to 8K in October 2008 and touched it again in March 2009, most of the sectors corrected heavily from their lifetime peak. L&T was down from INR 2300 to INR 560 (75%), BHEL was down from INR 2925 to INR 1000 (65%), NTPC went down from INR 290 to INR 115 (60%), etc. etc. Which sectors still looks very expensive and can go down more in the next correction? The more may not be in prices but may be in P/Es, i.e. since earnings will grow from say 10 to 15, price may go to 105 instead of 100 but P/E will be at 7 instead of 10 in the last correction.

The first and foremost that I see is Power. Utilities generally do not trade in high P/E multiples. They are doing it in India right now due to high growth lying ahead. But that growth may not come in the companies who are already generating power. New players will enter the space and take the share out of the existing players' pie. Thus the enthusiasm of investors will not come true about power companies. NTPC, Tata Power, BHEL and Reliance Infra fall under this sector.

Oil & Gas is a commodity and can trade at a P/E of single digits. So RIL and ONGC can clearly make new lows, may be not in terms of prices but can be in terms of P/E.

FMCG remained in low twenties even when the Sensex was trading at almost single digit P/E. They can correct more and they have a reason too, monsoon. HUL and ITC fall under this sector.

Cement will have some pressure since prices have started correcting. This is not a dent in profits, this is a dent in revenues. Grasim, Jaiprakash Associates and ACC will get impacted.

We are talking about almost 40% of the index constituents. Be cautious. I am posting this on 9th August but since I started preparing it on 6th August, the date of posting is coming up as 6th August.