26 special stocks that rallied up to 1,000% when market saw free fall
Almost 90 per cent of BSE stocks have witnessed bear hammering on Dalal Street.
Almost 90 per cent of BSE stocks have witnessed bear hammering on Dalal Street over the past 20 months and many of them have wiped out up to 99 per cent of investors’ wealth.
The ones that survived this rout have rewarded equity investors in a big way; some even doubling investor wealth in a difficult market.
These stocks are from sectors such as chemicals, consumer food, pharma, shipping, telecommunications, plastic products and, believe it or not, even NBFC.
The chart topper is aquaculture seafood products firm Coastal Corporation, whose shares have rallied 1,370 per cent to Rs 249 as of August 7, 2019 from Rs 16.90 on January 1. It was followed by Grandeur Products (up 557 per cent), Leading Leasing Finance (up 549 per cent) and Darjeeling Ropeway (up 530 per cent).
Others include Tiaan Ayurvedic, Satia Industries, Capital India, Procter & Gamble Health, Ugro Capital and Refex Industries, whose shares have gained 200-500 per cent during this period. These stocks rallied at the time when the broader equity indices were facing severe selling pressure amid the NBFC crisis, selling by foreign institutional investors and hammering of select stocks due to corporate governance issues.
The BSE Smallcap and Midcap indices have dipped 15.50 per cent and 12.40 per cent, respectively, since January 1 last year, while the benchmark BSE Sensex is still up 1.20 per cent.
“When there is this kind of pessimism, we do not wait for the index to bottom out. There will be stocks that would have already bottomed out or must be at the bottom because the earnings momentum must be already on with them,” says Raamdeo Agrawal, MD & Co-Founder, Motilal Oswal Financial Services.
“One has to look at stocks individually, but I am seeing value emerge in this market,” he said. Agrawal prefers private financials, private insurance, select auto and consumer stocks which have corrected quite a bit.
Antique Stock Broking sees a strong possibility of sharp earnings downgrade across sectors owing to the overall economic slowdown.
“Earnings disappointment may lead to market volatility and we recommend buying quality companies (having reasonable earnings growth forecast) that are available at reasonable valuation,” it said.
However, market veterans warn that past performance does not guarantee future returns in the stock market. Therefore, one should do own research or take guidance from financial advisers before taking position in any such stock.
There are also stocks like Maestros Electronics, Apollo Finvest, East West Holdings, Jump Networks, Sadhana Nitro Chem, IOL Chemicals, Kavit Industries, Responsive Industries, Prabhat Technologies, Valiant Organics, Seamec and Apollo Tricoat Tubes, which have advanced over 100 per cent during this period.
Companies like Jyoti Resins, Vinati Organics, Cantabil Retail and NIIT Technologies gained over 90 per cent between January 1, 2018 to August 7, 2019.
On the losers’ table, as many as 105 companies on the exchange have lost over 90 per cent value since January 2018 with Alps Motor, Swadesh Industries, LEEL Electricals, Crescent Leasing, ACI Infocom and Sai Baba Investment falling between 97 per cent and 99 per cent.
If you are planning to catch these falling knives, hold on. Data shows since 2010, only eight of the 228 stocks that corrected more than 75 per cent from their peak levels have returned to their previous highs.
ICICI Securities said how low this selloff can go on is a wrong question to ask. “Instead, investors should analyse whether a business model and its long-term prospects are intact or not, if a business qualifies as a going concern (given the risk of bankruptcy due to unsustainable financial leverage), if it is facing temporary challenges like aggressive competition or cyclical downturn; and whether the valuation stands at the lower end of a long-term range.”