Just 20% of stocks defy gravity, rally up to 58% in 5 sessions

An aerial view of Dalal Street shows the massive destruction of investors’ wealth during the past five consecutive days of the selloff. Market watchers believe that subdued global cues, intense selling by foreign institutional investors (FIIs) and risk-off sentiment across the globe amid fear of tightening by the US Fed dampened the mood in the domestic equity market.

As a result, just 20 per cent of stocks on the BSE managed to deliver a positive return to investors since January 17. With a gain of 58 per cent, Bajaj Arts emerged as the top gainer on the exchange. Shares of the company jumped to Rs 26.50 on January 24 from Rs 16.75 on January 17. It was followed by Khandwala Securities (up 44 per cent), Rasandik Engineering Industries (up 39.56 per cent), Ganga Pharmaceuticals (up 39.52 per cent) and Nettlinx (up 38.08 per cent).

Overall, the market capitalisation of BSE-listed firms retreated by Rs 19.52 lakh crore to Rs 260.50 lakh crore from Rs 280.02 lakh crore in the past five sessions. However, players like Binny (up 36.37 per cent), Paramone Concepts (up 31.47 per cent), Dharani Finance (up 28.94 per cent) and IKAB Securities (up 27.61 per cent), Ruttonsha International Rectifier (up 27.60 per cent) and Swiss Military Consumer Goods (up 27.57 per cent) also defied the gravity in the domestic equity market.

The benchmark equity index BSE Sensex index crashed 6.23 per cent to 57,491.51 on January 24 from 61,308.91 on January 17. Likewise, the 50-share NSE Nifty index also tanked 6.33 per cent to 17,149.10 during the same period.

Commenting on the further movement, VK Vijayakumar, chief investment strategist, Geojit Financial Services said, “This excessive volatility is likely to continue for a few more days until clarity emerges out of the crucial Fed meet. The market is discounting a hawkish Fed and if the Fed sounds very hawkish and indicates four rate hikes in 2022 the market will again turn weak. On the contrary, if the Fed sounds less hawkish than the market fears and indicates a decline in inflation in the second half of 2022, the oversold markets are likely to stage a comeback and even a sharp rebound on short-covering.”

He further added that investors have to be cautious and be slightly defensive in their strategy since valuations have not become cheap.

 “Since there is value in high-quality financials and information technology, long-term investors can start nibbling in these segments,” Vijayakumar added.

IL&FS Engineering, Kingfa Infra Ventures, HSIL, Palred Technologies, Jindal Photo, Jindal Poly Investment and Finance Company, Daulat Securities, Bengal and Assam Company, Jindal Worldwide, Tata Elxsi, Add-Shop E-Retail and The Andhra Sugars also gained between 10 per cent and 20 per cent during the selloff.

Devang Mehta, head-equity advisory, Centrum Wealth said, “Markets have been correcting in the last few days on the back of fears of interest rate hikes across the developed economies plus the ongoing tapering of stimulus. Though the Covid numbers are still something to ponder on, but Omicron variant not being as severe has made the market believe that the days of easy liquidity seem to be nearing an end.”

“More than index correction this round of volatility has made a lot of good businesses correct, which should ideally be utilised as an opportunity in adversity. An approach to buy quality franchisees and market-leading businesses gradually or in tranches will ensure that you take advantage of volatility, as we approach the Union Budget amidst the ongoing third quarter result season,” Mehta said.