Select big gainers of 2021 have been struggling to keep their heads above water amid the ongoing correction on Dalal Street. Data available with Ace Equity showed that as many as 60 popular wealth creators of last calendar year have tanked up to 53 per cent on a year-to-date (YTD) basis in 2022.
The benchmark BSE Sensex and broader index BSE 500 have cracked 8 per cent and 9 per cent, respectively, YTD on account of heavy selling by foreign institutional investors amid rising concern over inflation. Both of these indices had gained up to 30 per cent in the previous calendar year.
Coming back to stocks, Brightcom Group, which rallied 2,518 per cent last year, has declined over 40 per cent so far in 2022. It was followed by Tata Teleservices (Maharashtra) (down 40 per cent). Shares of Tata Teleservices (Maharashtra) soared nearly 2,500 per cent last year.
Commenting on the underperformance of broader indices in 2022, Satish Ramanathan, chief investment officer-equity, JM Financial Asset Management said, “The underperformance of midcaps and smallcaps post their outperformance was along expected lines as retail investors become more cautious. In the early part of the fall, large caps underperformed as FPIs sold significantly and retail momentum continued. Now we see retail also becoming more cautious as evidenced by lower trading volumes.”
“The big picture however has not changed and midcap companies could offer higher growth potential and maybe good investment opportunities if picked up at the right valuations,” Ramanathan said.
Data further highlighted that stocks like Welspun India, Zensar Technologies, Larsen & Toubro Infotech, Lux Industries, Sobha, Jindal Stainless, Mindtree, Dixon Technologies, Coforge, L&T Technology Services, Radico Khaitan, Jindal Stainless (Hisar), Minda Industries, Birlasoft and Tanla Platforms, which also rallied over 100 per cent last year, have plunged somewhere between 30 per cent and 53 per cent between January 1 and May 26 this year.
On asking about the available buying opportunities, Mohit Nigam, head-PMS, Hem Securities said, “At present, there are some good long-term opportunities in fundamentally strong IT, specialty chemical and metal sector companies. We also believe that the auto sector especially commercial vehicles space can witness strong growth in the short to medium term.”
On the other hand, Shrikant Chouhan, head of equity research (retail), Kotak Securities said, “We find valuations of financials stock attractive in general. Also, valuations of ‘growth’ stocks in IT services and pharmaceuticals sectors appear more reasonable after the recent sharp correction and most ‘value’ stocks continue to trade at inexpensive multiples.”
Among other major gainers, Happiest Minds Technologies, Vardhman Textiles, Apollo Hospitals Enterprises, Carborundum Universal, TCI Express, Mphasis, Persistent Sytems, Hikal, Sonata Software, Cyient, Alkyl Amines Chemicals, Bajaj Electricals, Hindustan Copper, IRCTC, Deepak Nitrite, Allcargo Logistics, Century Textiles, Saregama India, SKF India, Tata Motors, Vedanta, APL Apollo Tubes, Tata Coffee, Redington, Trident and Intellect Design Arena have also declined between 9 per cent and 30 per cent this year against over 100 per cent gains registered by these companies last year.
For stock-specific investors, AK Prabhakar, head of research, IDBI Capital Markets suggested investors slowly accumulate quality stocks where there is good corporate governance and strong management. He is bullish on players like Bharti Airtel, HDFC Life, Sona BLW Precision Forgings, Tata Power, Kolte Patil, Bayer Cropscience, AMI Organics, Asian Paints, Mahindra & Mahindra, Wipro, Avenue Supermarts, Mazagon Dock Shipbuilders, ICICI Bank, Clean Science and Technology and Nippon Life India Asset Management.
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