NEW DELHI: Four months is too short a period for a stock to generate multi-bagger returns.
But 19 stocks on BSE did exactly that through India’s winding election season, as the broader market turned weak and market breadth dwindled because most investors had turned cautious ahead of the election outcome.
While these 19 stocks climbed between 100 per cent and 300 per cent, 150 others added as much as one-third of their market values since February 26, when India struck in Pakistan-based terror camps, which analysts said helped improve Prime Minister Narendra Modi’s chances of winning a second term in the general election that followed.
As many as 1,250 of the 2,300-odd actively-traded stocks on BSE eroded wealth during this period, as confused investors awaited cues on reforms and possible sops for an economy that had begun to show signs of slowdown.
To be sure, none of the 19 multi-baggers was part of the BSE500 index. They were mostly smallcaps with combined market capitalisation of a mere Rs 854 crore as of Thursday, June 13.
They included Meenakshi Enterprises (up 300 points), BCC Fuba India (up 225 per cent), 7NR Retail (221 per cent), Ashari Agencies (212 per cent), Artech Power & Trading (180 per cent), Refex Industries (165 per cent) and OCL Iron and Steel (158 per cent).
Also on the list are BIL Energy Systems, Usha Martin Education & Solutions and Geetanjali Credit and Capital.
And then, there were a few known names, such as Adani group’s Adani Gas, city gas distributors Gujarat Gas, which jumped 68 per cent and 56 per cent, respectively. Among others, SpiceJet, Indiabulls Real Estate, PNC Infratech, Just Dial, Sadbhav Engineering, Intellect Design Arena, Orient Cement gained 50-60 per cent.
Equity benchmarks Sensex and Nifty have hit new record highs ever since Modi won a thumping majority in the election.
But those were sparks of brilliance in an otherwise depressing canvas where popular stocks such as IIFL Finance, Reliance Capital, Reliance Infrastructure, Jet Airways, Reliance Communications, Eveready Industries, Igarashi Motors India, Mcleod Russel India and 40 other stocks have lost half of their market values; while 165 others lost over one third, or 33 per cent.
A crippling liquidity crisis in the NBFC space, debt distress at several diversified businesses, the banking sector still wrestling with bad loans, a delay in earnings revival for India Inc and signs of slowdown in the broader economy made a large part of the market bleed all through this period.
“Desperate measures are required to stem the current downturn in the economy, given the state of the financial sector,” said Pramod Gubbi, Marcellus Investment Managers.
“We are seeing the ramifications of the financial sector stress in the real economy in the past few quarters. Companies across sectors have reported drop in growth and there is a clear slowdown,” he said.
Finance Minister Nirmala Sitharaman has held consultations with various stakeholders all through this week ahead of her annual Budget due on July 5. While the financial sector has pitched for a special liquidity window for NBFCs and tax sops for retail investors in corporate bonds and term insurance plans, the infrastructure sector has sought more capital and tax rebates for creating sustainable and stable opportunities.
Source: Economic Times