The pace of wealth creation has slowed down on Dalal Street this calendar.
Fund managers and investors are puzzled that nearly 80 per cent of the liquid companies on BSE have eroded investor wealth since January this year.Total market capitalisation of the BSE-listed companies has plunged by over Rs 6 lakh crore to Rs 145.62 lakh crore as of May 21 from Rs 151.74 lakh crore in December last year.
Second-rung stocks have underperformed the largecaps so far this year, with the BSE Midcap and Smallcap indices falling 12 per cent each against 2.38 per cent rise in the BSE Sensex between January 1 and May 21.But when the entire market is looking like an ocean of red, little-known stocks such as Sadhana Nitro Chem, Bullish Bonds and Holdings, RMG Alloy Steel, GSS Infotech, Shukra Pharmaceuticals and Mega Corporation have rallied between 200 per cent and 355 per cent since the beginning of the year.Some of these stocks have even doubled investor wealth in just five months.
They included Fairdeal Filaments, Laurel Organics, Excel Industries, Maha Rashtra Apex Corporation, Navkar Builders, Gorani Industries, Coastal Corporation, Lime Chemicals, Indiabulls Integrated Services, Ashari Agencies, Sinner Energy, Creative Castings, Capital India Finance.
Shares of Swaraj Automotive, Chokhani Securities, Zenith Exports, Satia Industries, Dolat Investments and Econo Trade have rallied between 150 per cent and 195 per cent in this period.But here is a disclaimer: these stocks are being mentioned only for information purposes.
Consult your financial advisor before taking a decision to buy or sell any of these based on such short-term performance.
Even market veterans are cautious at the moment.
Harsha Upadhyaya, CIO of Equity, Kotak Mutual Fund said it is time to remain cautious, because given the many macro headwinds, the market has not really given up those valuation levels; thats particularly true of largecaps.
The midcaps are still trading at a premium to their largecap peers.A falling rupee, elevated crude oil prices and sustained foreign fund outflows have been haunting the domestic equity market over the past few months.
Crude prices last week hit the $80 mark for the first time since November 2017.Portfolio management services, which largely bank on smallcap shares to deliver superior returns, have also been feeling the heat of the recent market correction.
Porinju Veliyath, founder of Kochi-based Equity Intelligence, who aggressively bets on smallcaps or microcaps, wrote in a recent letter to his clients that he was baffled by the extent of erosion in portfolio value within a very short period.We have nothing much to do right now in a market, which absolutely lacks buying interest, but wait patiently, Veliyath said in his letter, addressing the underperformance of the PMS since January this year.
With up to 93 per cent fall, shares of Gitanjali Gems, Vakrangee, Talwalkars Better Value Fitness, Bombay Rayon, Reliance Naval, Orient Paper, Jaypee Infratech and Jyoti Structures have been among the biggest wealth destroyers so far this calendar.This year is going to be volatile, says Nischal Maheshwari, Head of Institutional Equities, Edelweiss Securities.Global factors are becoming much more powerful than the domestic ones and we have seen the dollar strengthen and all emerging market currencies have come off.
Yield of 10-year US bonds have gone up to 3.1 per cent and it looks like they are still set for three to four rate hikes this year, he told ETNow in a chat.More and more countries, like Indonesia, have increased interest rates in recent times.
Maheshwari said the same is going to happen in India soon.
In this kind of a scenario, the stock market would be volatile and may see a bigger correction, he said.Top buy calls from global brokerages21 May, 2018The domestic equity market continued to decline in Monday's session.
The Sensex fell amid selling in realty, healthcare, metal, auto, consumer durables and basic materials counters.Investors were wary after BJP received a major political setback in Karnataka, while a falling rupee, rising crude oil prices and spiking US bond yields continued to haunt the market.But some analysts said investors can use this weakness to buy quality stocks at cheaper valuations.
Here are seven stocks that some global brokerages picked as their top buy calls this morning.
Take your pick:Godrej Consumer | Outperform | Target price: Rs 1,28521 May, 2018Godrej Consumer is among top picks of global brokerage Macquarie.
The brokerage in a note said the company management has high confidence in recovery.
It further added that new product launches will aid this process.Ashok Leyland | Buy | Target Price: Rs 17521 May, 2018Goldman Sachs maintained 'Buy' on Ashok Leyland, citing that new launches and demand would add value to the stock.
The brokerage said in a note that Ashok Leyland's Q4 numbers were hit by a fall in company's revenue.Tata Chemicals | Hold | Target Price: Rs 70521 May, 2018Tata Chemicals is a 'hold' for Deutsche Bank with a target price of Ra 705.
The brokerage said Tata Chemical's debt declined but earnings grow stay muted.
The brokerage expects the company to perform better in all geographies except Europe.Hindalco | Buy | Target Price: Rs 28021 May, 2018Deutsche Bank has initiated covering Hindalco with a 'Buy' call.
The brokerage said in a note that the company is expected to gain on tightening in aluminium prices.