Aptech, Lumax Industries, Vedanta, Indian Bank, Venky's India have appreciated over 200% in a year
As many as 161 stocks from the BSE 500 and small-cap indices have surged over 100 per cent each in the past one year, amid a strong rally in equity markets.
Of these, 30 stocks that include Aptech, Lumax Industries, Vedanta, Indian Bank, Venky's India, Manappuram Finance, Escorts and Datamatics Global Services have risen over 200 per cent since February 29, 2016, when the S&P BSE Sensex hit a 52-week low in intra-day deals.
By comparison, the benchmark S&P BSE Sensex at around 28,984 has rallied 26 per cent since then. The S&P BSE 500 index and the S&P BSE Small-cap index have rallied 33 per cent and 44 per cent, respectively.
A strong inflow of a little above Rs 90,000 crore (Rs 900 billion) collectively by foreign portfolio investors (FPIs) and mutual funds (MFs) in equities during the past year has fuelled the rally.
Better financial performance by these companies for the trailing 12-month (TTM) period ended December 31 is also partly responsible for increased investor participation.
While FPIs have made a net investment of Rs 47,841 crore (Rs 478.41 billion), another Rs 42,990 crore (Rs 429.9 billion) has come from MFs.
Sectorally, 17 stocks are from chemical entities and 16 from financials, including banks. Stocks of companies in the steel, pharmaceuticals, automobile ancillary and cement sectors have seen good appreciation.
Of the 161 companies mentioned, 159 had seen strong 78 per cent year on year growth in aggregate net profit, of Rs 32,546 crore (Rs 325.46 billion) for the TTM ended December 2016. They had profit of Rs 18,208 crore (Rs 182.08 billion) for the TTM ended December 2015.
Thirumalai Chemicals, largest gainer among these, has seen its market value appreciate 555 per cent, to Rs 859.
The company had reported a consolidated net profit of Rs 75.8 crore (Rs 758 million) for TTM-2016 against Rs 5.9 crore (Rs 59 million) in TTM-2015. Vedanta has rallied 275 per cent, from Rs 70.85 to Rs 265.35, after the company trimmed its consolidated net loss to Rs 7,448 crore (Rs 74.48 billion) in TTM-2016. It had reported a loss of Rs 16,907 crore (Rs 169.07 billion) in TTM-2015.
Ahead
Though most experts remain positive on the outlook for Indian equities over the next few quarters, a pick-up in corporate earnings, stable global and domestic macros and flows into the equity segment by domestic institutions and foreign institutional investors remains key for the market to sustain at higher levels, they say.
“We expect the flows to continue in the near term. Investors should not look at a decrease in local flows as a lead indicator for Indian markets -- flows will follow returns, rather than the other way round.
This means the recent market strength might continue, despite the expected sharp earnings declines ahead," says Gautam Chhaochharia, head of India Research at UBS Securities, in a co-authored report with Sanjena Dadawala.