The S&P BSE Sensex hit a record high of 36,443 on January 29 but witnessed selling pressure in the past 5 months as traders preferred to book profits
In January, the S&P BSE Sensex had hit the record high level of 36,443. After a rollercoster ride last month, it reclaimed that level on an intraday basis this week, resulting in muted returns over the period. But over 20 stocks from the S&P BSE 500 index gave 30-80 percent return in the same period.
The S&P BSE Sensex hit a record high of 36,443 on January 29, but witnessed selling pressure as traders preferred to book profits in past five months.
The bulls managed to push the index back above the same level on Thursday and hit a fresh record high of 36,740 on Friday i.e. July 13 in intraday trade but as many as 22 stocks outperformed the index by a wide margin as they rose 30-80 percent in the same period.
Stocks which rose above 50 percent from January 29 to July 12 include names like Indiabulls Ventures, Firstsource Solutions, and V-Mart Retail. Stocks which gained 30-40 percent in the same period include Britannia, Avenue Supermarts, Nestle India, Ipca, Jubilant FoodWorks, NIIT technologies, and Bajaj Finance, etc. among others.
The S&P BSE managed to climb all wall of worries to hit a fresh record high, thanks to a rally in some of the largecap names. High valuations, falling rupee and trade war fears along with the rise in crude oil prices are some of the immediate concerns which might cap the upside.
The Nifty50, which is still over 100 points away from record high, on Thursday managed to reclaim 11,000-mark for the first time since February 1 when Sensex hit a record high. Analysts feel that the liquidity and positive momentum could well take the index to record highs, if not in July then by Independence Day.
The last five hundred points rally in Nifty has been led by eight stocks and all of them belong to the largecap space which includes names like TCS, RIL, HDFC twins, Kotak Mahindra Bank, Infosys, HUL & Maruti Suzuki.
“These stocks account for 44 percent of Nifty50 market cap and are up by 10 percent on an average since May 23 when Nifty was below 10,500 level. The currency depreciation has helped IT stocks deliver handsome returns in the last one month. Valuations are rich hence upside could be limited,” Rusmik Oza Senior Vice President (Head of PCG Research) at Kotak Securities.
“One a 1-year forward Nifty EPS of Rs 576 it trades at 19x, which is quite rich and one standard deviation above the 10-year average. We expect Nifty to pause at 11,200 which was the previous peak,” he said.
From the smallcap space, two stocks managed to more than double investors’ wealth in the same period which includes names like Elctrosteel Steels (up 595%), and Nelco (up 106%).
“Market has crossed all-time highs on the back of global cues as well as solid start to earnings season with TCS beating expectations. The divergence between largecaps and midcaps has widened in 2018 with midcap and small cap indices still down 15-20% from the top,” Gautam Duggad, Head of Research, Motilal Oswal Institutional Equities.
Duggar further added that his relative preference stays with large caps as midcaps are still trading at a premium to largecaps. He likes consumption, auto, private financials and IT.
The S&P BSE Smallcap index remained under pressure is still down a little over 14 percent in 2018, but as many as 68 stocks rose 10-100% from 29th January to 12th July which includes names like Bajaj Electricals, VIP Industries, Aarti Industries, Graphite India, Gruh Finance, Hexaware Technologies, V-Mart, MindTree, and Indiabulls Ventures etc. among others.
From the midcap space, only 9 stocks rose 10-30 percent which include stocks like Mphasis, Page Industries, Bajaj Finserv, Berger Paints, Exide Industries, Glaxo Pharma, MRF, Marico, and P&G Hygiene and Healthcare.