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IT'S a case of 'the most punished stocks' turning into outperformers post election results. Among the BSE 500 companies, as many as 458 companies outperformed the sensex between May 18, 2009 and June 4, 2009, a SundayET analysis has revealed. Surprisingly, the outperformers are not those fundamentally strong or defensive companies, which investors were chasing, during the last one year but those which were major underperformers mainly because of dearth of funds.
According to Aseem Dhru, MD & CEO of HDFC Securities, when market sentiments move from extreme pessimism to cautious optimism, the most punished stocks — which investors in the past have mercilessly offloaded — always gain the most. "When the equity market fell during 2000-2002, even Infosys Technologies lost almost half of its market price but the stock was one the outperformers in the following bull-run," he said.
According to the analysis, the sensex gave a return of around 5% during the above mentioned period, whereas more than 90% of the companies on the BSE 500 index have given relatively higher returns. Companies such as Unitech, DLF, Suzlon Energy, Sobha Developers, Tata Steel, Jaiprakash Hydro Power, Parsvnath Developers, Kingfisher Airlines, Future Capital Holdings and Gammon India are the prominent gainers. In fact, Unitech and Kingfisher Airlines gained more than 50%. Stock prices of companies such as Sobha Developers and Jaiprakash Hydro Power, meanwhile almost doubled.
This has happened on the back of easing liquidity position and revival in demand. Lack of funds affects a few sectors
FOR instance, real estate companies such as Unitech recently raised Rs 1,620 cr through qualified institutional placement whereas DLF raised over Rs 3,000 cr through a stake sell.
According to Ashvin Parekh, partner in Ernst & Young, the liquidity condition was tight during the last year. Lack of funds impacted a few sectors severely. However, with the liquidity condition improving, investors' focus is now shifting towards the companies where the perceived value is higher.
After the election results, however, there were some surprise underperformers. These include big names such as Bharti Airtel, Infosys Technologies, Tata Communications and Wipro. Whereas Bharti Airtel lost over 13% mainly due to apprehension among investors on the MTN buyout, Infosys Technologies lost 8%.
Among the other underperformers are Hero Honda Motors, Hindustan Unilever, Glaxosmithkline Pharmaceuticals and Shree Ashtavinayak Cine Vision. Interestingly, these companies generated positive returns during the last year. In fact, last year banking, oil and real estate companies were hit hard., Investors were merciless on banking stocks too on apprehensions of higher credit defaults. Also, oil companies were hit on the back of higher crude oil prices, whereas lack of funds took a toll of real estate companies. Many of the real estate companies lost as high as 90% of their share price during last year.
Nevertheless, foreign institutional investors, which withdrew about $13 bn during the last year, brought back as much as $ 4 bn only in the month of May this year. According to Mr Dhru of HDFC Securities, a major portion of the amount has been invested in the most punished stocks.
anand.rawani@timesgroup.com
According to Aseem Dhru, MD & CEO of HDFC Securities, when market sentiments move from extreme pessimism to cautious optimism, the most punished stocks — which investors in the past have mercilessly offloaded — always gain the most. "When the equity market fell during 2000-2002, even Infosys Technologies lost almost half of its market price but the stock was one the outperformers in the following bull-run," he said.
According to the analysis, the sensex gave a return of around 5% during the above mentioned period, whereas more than 90% of the companies on the BSE 500 index have given relatively higher returns. Companies such as Unitech, DLF, Suzlon Energy, Sobha Developers, Tata Steel, Jaiprakash Hydro Power, Parsvnath Developers, Kingfisher Airlines, Future Capital Holdings and Gammon India are the prominent gainers. In fact, Unitech and Kingfisher Airlines gained more than 50%. Stock prices of companies such as Sobha Developers and Jaiprakash Hydro Power, meanwhile almost doubled.
This has happened on the back of easing liquidity position and revival in demand. Lack of funds affects a few sectors
FOR instance, real estate companies such as Unitech recently raised Rs 1,620 cr through qualified institutional placement whereas DLF raised over Rs 3,000 cr through a stake sell.
According to Ashvin Parekh, partner in Ernst & Young, the liquidity condition was tight during the last year. Lack of funds impacted a few sectors severely. However, with the liquidity condition improving, investors' focus is now shifting towards the companies where the perceived value is higher.
After the election results, however, there were some surprise underperformers. These include big names such as Bharti Airtel, Infosys Technologies, Tata Communications and Wipro. Whereas Bharti Airtel lost over 13% mainly due to apprehension among investors on the MTN buyout, Infosys Technologies lost 8%.
Among the other underperformers are Hero Honda Motors, Hindustan Unilever, Glaxosmithkline Pharmaceuticals and Shree Ashtavinayak Cine Vision. Interestingly, these companies generated positive returns during the last year. In fact, last year banking, oil and real estate companies were hit hard., Investors were merciless on banking stocks too on apprehensions of higher credit defaults. Also, oil companies were hit on the back of higher crude oil prices, whereas lack of funds took a toll of real estate companies. Many of the real estate companies lost as high as 90% of their share price during last year.
Nevertheless, foreign institutional investors, which withdrew about $13 bn during the last year, brought back as much as $ 4 bn only in the month of May this year. According to Mr Dhru of HDFC Securities, a major portion of the amount has been invested in the most punished stocks.
anand.rawani@timesgroup.com
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