Sector movers: Sainsbury drops, but Tesco lifts supermarket sector higher

10th Nov 2014 14:51

Shares in J Sainsbury were in the red on Monday but the wider UK food and drug retail sector was the best-performing category on the back of gains from much larger rival Tesco.Tesco, the largest retailer in the UK with a market capitalisation of around £15.7bn, was trading nearly 4.7% higher at 193.1p with investors continuing to show confidence in the company's turnaround following last month's interim results.The stock was given a boost by an upgrade out of Bernstein Research from 'market perform' to 'outperform', which said that there is a "certainty of failure" implied in the current share price, which is still down 42% this year despite Monday's gains.Analyst Bruno Monteyne said that the current price of Tesco's stock "implies 'a rights issue is around the corner' and 'the business can't be fixed'". He said: "Both are possible but the near certainty of both events in the share price doesn't make sense to us."Sector peer Wm Morrison was also performing well, up 1.2% at 170.4p in afternoon trade.Sainsbury was down 2.1% at 256.2p but with a market value of £4.9bn didn't have enough weight to drag the sector lower.Sainsbury investors were treading cautiously ahead of the results of its strategic review, due out alongside the supermarket's interim results."We expect to hear about re-engineering, cost cutting, and productivity opportunities, but with sales densities falling, cost ratios rising and gross margins restricted due to competitive pressures, then we see little prospect for growth." said HSBC analyst David McCarthy in a research report.HSBC kept an 'underweight' stance on the stock.Top performing sectors so far todayFood & Drug Retailers 2,789.03 +3.18%Industrial Metals & Mining 1,335.42 +2.59%Oil Equipment, Services & Distribution 21,913.34 +2.30%Household Goods & Home Construction 12,075.99 +1.85%Forestry & Paper 11,536.12 +1.23%Bottom performing sectors so far todayIndustrial Transportation 2,901.36 -0.80%Electricity 9,694.82 -0.77%Construction & Materials 3,701.57 -0.57%Support Services 6,258.72 -0.33%