Which is the best share market sector to invest in following the market crash?

OK, so the S&P/ASX 200 had a bad day yesterday. Billions were wiped off the share market in one of the biggest falls of the year. A sharp dive in oil prices over the past two days has shattered investor confidence.

But it’s not all bad news! Today I ’ve analysed all 10 sectors of the S&P/ASX 200 following the crash,  to find out which are the best-performing sectors, and which are some of the best-performing shares.

Sectors are ranked from the worst performing to best performing, starting at number 10.

10 . Coming in at number ten. The worst performing sector is the  S&P/ASX 200 Materials Index . The materials sector is down by a total of 13.4%, 5.5% worse than the S&P/ASX 200. The sector which contains names such as BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Newcrest Mining Limited (ASX: NCM) has been hammered this year.

With the prospect of commodity prices remaining at record lows for several years and waning Chinese demand for commodities, it seems the pain is likely to continue in the Australian mining sector for some time.

One standout performer in the Materials sector is OceanaGold Corporation (ASX: OGC). The company has a P/E ratio (TTM) of 7*, against the sector average of 19*.

(*Source: Commsec)

9. Coming in at number nine, is the S&P/ASX 200 Energy Index. The energy sector is down by a total of 12.5%, 4.6% worse than the S&P/ASX 200. The sector contains names such Woodside Petroleum Limited (ASX: WPL), Origin Energy Ltd (ASX: ORG), and Santos Ltd (ASX: STO).

Weakness in the oil and LNG price has obliterated the sector, with typical headlines including terms like “write-downs on assets and reserves”, “falling revenues” and “cutbacks”. Like the materials sector, it looks like it may be some time before we see a comeback for this sector.

One standout performer in the Energy sector is Caltex Australia Limited (ASX: CTX). The company has a P/E ratio (TTM) of 75*, against the sector average of 17*.

(*Source: Commsec)

8. Number eight belongs to the S&P/ASX 200 Financials Index. The financials sector is down by a total of 10.3% YTD, 2.3% worse than the S&P/ASX 200. The sector contains names such as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd. (ASX: NAB), Australia and New Zealand Banking Group (ASX: ANZ), and Westpac Banking Corp (ASX: WBC).

The financials sector has been hit hard with the Australian Prudential Regulatory Authority (APRA) trying to shore up the lenders against a potential surge in mortgage losses and to ensure compliance with global capital regulation. This means our largest banks have been required to raise record amounts of equity capital.

Financials are also under pressure from the impending threat of a slowing real estate market, and the likelihood that some of the banks, if not all, may have to reduce dividend payouts.

One standout performer for the Financials sector is Scentre Group Ltd (ASX: SCG). The company has a P/E ratio (TTM) of 71*, compared to the sector average of 17*.

(*Source: Commsec)

7 . Number seven is the  S&P/ASX 200 Info Tech Index . The info tech  sector is down by a total of 6.7%, 1.1% better than the the S&P/ASX 200. The sector contains names such as Computershare Limited (ASX: CPU), Link Administration Holdings Ltd (ASX: LNK), and Carsales.Com Ltd (ASX: CAR).

The info tech sector has been heavily influenced by the poor performance of a number of its big names.  Myob Group Ltd (ASX: MYO), whose share price has dropped by close to 9% and XERO FPO NZ (ASX: XRO), whose share price has sunk almost 20% this year.

One standout performer for the sector is Technology One Limited (ASX:TNE). The company has a P/E ratio (TTM) of 42*, compared to the sector average of 23*.

(*Source: Commsec)

6 . Number six is the  S&P/ASX 200 Industrials Index . The industrials  sector is down by a total of 3.9%, 4% better than the the S&P/ASX 200. The sector contains names such as Transurban Group (ASX: TCL), Brambles Limited (ASX: BXB) and Qantas Airways Limited (ASX: QAN).

The industrials sector is enjoying some nice gains this year by some of its biggest names. Cimic Group Ltd (ASX: CIM), who recently announced its group’s companies Pacific Partnership and CPB Contractors have been selected by the Australian Capital Territory (ACT) government as the preferred proponent to deliver the first stage of Capital Metro, Canberra’s light rail project.

Macquarie Atlas Roads Limited (ASX: MQA), which recently announced its weighted average toll revenue and traffic for the December 2015 quarter increased by 4.1% and 3.3% respectively, and Virgin Australia Holdings Ltd (ASX: VAH), which is enjoying a significant reduction in jet fuel prices.

One standout performer for the i ndustrials sector is Virgin Australia Holdings Ltd (ASX: VAH). The company has a P/E ratio (TTM) of 480*, compared to the sector average of 24* This is due to the fact that its current share price is around 0.48 cents, compared to its EPS (TTM) of just 0.10 cents.

(*Source: Commsec)

Tune in tomorrow for Part 2 of “Which is the best sector in invest in following the market crash”, to find out which sector is #1 right now.

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Motley Fool contributor John Hopkins has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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