As hope rally fizzles, half of BSE-500 stocks down up to 98% from 52-week highs

After posting record gains in 2014, especially after Narendra Modi stormed to Parliament with a strong electoral mandate in May, the Indian stock market seems to be fizzling out.

The expectations from Modi, who had made promises of quick turnaround in the run-up to the elections, are now more real. And the hope rally on the bourses is struggling to sustain the momentum. The enthusiasm among investors has gradually withered.

In order to understand a broader perspective of the current weakness in the equity markets, we have chosen top BSE-500 stocks and their performance so far in the current year. Of these, nearly 250 stocks are trading close to 20-98 percent lower from their respective 52-week highs.

These stocks, spread across the sectors such as banking, finance, realty, power, infrastructure and others etc, are the biggest laggards due to absence of big-ticket reforms, slowdown in government spending, uptick in banks’ bad loans and subdued monsoon prospects.

PMC Fincorp, an NBFC company engaged in corporate and personal finance, debt syndication and private placement among other services etc, topped the losers chart, recording a steep fall of 98 percent over its 52-week high level touched in October last year. From its 52-week high of Rs 244.70, the stock has crashed to Rs 6 on July 3.

Bhushan Steel, meanwhile, has plunged 86 percent to Rs 56 from Rs 406. The fall was more on account of the company’s vice-chairman & managing director Neeraj Singhal’s name appearing in the bribes-for-loan scam that triggered massive sell-off in the counter.

In fact, the stock took a beating last year as well, tanking 82 percent while in the first six months of 2015, it has declined 36 percent. The company has a huge debt of Rs 37,000 crore on its books and is currently servicing its debt under the corporate debt restructuring route.

Among the notable ones, shares of Unitech, Jindal Steel, Lanco Infratech, Aban Offshore, KSK Energy Ventures, Shree Renuka Sugars, United Bank, IVRL, HCL Infosystems, Reliance Power, Reliance Communications and Bajaj Hindusthan are down 30-52 percent from their one-year highs.

“Companies like Unitech, Lanco Infratech, Aban Offshore, Shree Renuka Sugars have huge debt on their books and with business fundamentals looking shaky in the wake of subdued economic growth, shares of these companies have come under fire,” said an analyst with a local brokerage.

In the infrastructure space, shares of companies like Jaypee Infra, IVRCL, GMR Infra, GVK Power Infra, IL&FS Transport are down 44-61 percent from their one-year highs, as most of these companies are facing challenges to service their huge debts besides lacklustre earnings performance in the wake of rising cost and weak order flows.

Several PSU banks such as UCO Bank, Dena Bank, Oriental Bank of Commerce, Syndicate Bank, IDBI Bank, Bank of India, PNB, Corporation Bank and Allahabad Bank were down 38-53 percent from their 52-week highs. The reason for their disappointing show is related to slowdown in credit growth and rising bad loans as several companies continue to default on their loans leading to uptick in NPA levels and subsequent drop in earnings.

While several stocks continue to struggle on the bourses compared with their 52-week highs, upmove in the first six months of the current calendar year helped several of them erase most of their losses and inch closer towards their 1-year high levels.

Several pharma and cement stocks have witnessed rise in their share price amid improving business fundamentals and hopes of better outlook going ahead.

Given the subdued broad market performance over the last 2-3 months, the market seems to be leaning towards safer bet and hence investors shored up their holding in pharmaceutical shares as rising USFDA approvals and weak currency against the dollar raised expectations of strong earnings growth. With M&A deals in pharma space steadily picking up, investors are also betting big on consolidation in the industry, thereby driving the share prices.

Shares of Natco Pharma, Biocon, Indoco Remedies, Shasun Pharma, JB Chemical & Pharma, Novartis India, Astrazeneca Pharma, Lupin and Strides Arcolab gained between 17-50 percent during the period.

In the cement space, stocks of companies like India Cements, OCL India, ACC, Ambuja Cements, Prism Cement, Orient Cement, Shree Cement and UltraTech Cement among others gained over 5-44 percent during the period in view of improving demand scenario while in some cases valuations getting attractive.

With data inputs from Kishor Kadam