The NSE Nifty 50 index has gained for the fourth straight quarter, despite high levels of volatility amid rising bond yields in the U.S. and profit booking at higher levels.
The 50-stock gauge rose 5% during the quarter ended March even after falling from its peak of 15,431 on Feb. 16. It gained 19.8%, 9.2% and 24.3% in the preceding three quarters.
As many as 37 of the index’s constituents returned gains to investors during the period. Tata Motors Ltd., Grasim Industries Ltd. and Adani Ports & SEZ Ltd. were the top three gainers, while Dr Reddy’s Laboratories Ltd., Maruti Suzuki India Ltd. and Kotak Mahindra Bank Ltd. were the top laggards.
Here’s a closer look at the gainers and losers during the quarter:
Tata Motors
The carmaker was the top performer on the Nifty 50 index during the quarter gone by, ending with gains of 64%—most of which came in January and February. The stock rose 43% and 23% in the last two months, respectively, to a 52-week high of Rs 357 on March 3.
This was the company’s best quarterly performance since the quarter ended September 2009, during which the stock doubled, gaining 103%.
Shareholder approval to hive off its passenger vehicle business, deleveraging focus for its U.K. arm, Jaguar Land Rover and optimistic commentary kept investors interested.
As many as 19 of the 35 analysts that track the stock have a ‘Buy’ recommendation, with six saying ‘Hold’ and 10 recommending ‘Sell’. The stock, based on 12-month Bloomberg consensus data, has a return potential of 6.8%.
Grasim
The Aditya Birla Group company was among the top performers on the Nifty 50 index during the quarter, rising 56.4% during the quarter, and is now trading at a record high.
The stock has gained in all three months this year, rising 13% each in January and February and 21% in March.
That’s the best quarterly performance by the company since the quarter ended September 1999.
During the quarter, Grasim announced its foray into the paints industry with a capital expenditure of Rs 5,000 crore over the next three years. Analysts praised the move, saying it will help improve within the standalone business and address capital allocation concerns.
As many as eight out of the 12 analysts that track Grasim Industries have a ‘Buy’ recommendation while four suggest ‘Hold’. The stock is trading 4% higher than its 12-month Bloomberg consensus price target of Rs 1,395.7.
Adani Ports & SEZ
Shares of India’s largest port operator rose 45% during January-March, with majority of its gains in February.
This was the best quarterly performance by the company since the three months ended June 2009, when it rose 86%. Its shares rose 41% during October-December 2020.
During the March quarter, the company said it would buy controlling stake in the Gangavaram Port. It purchased the initial stake from Warburg Pincus for Rs 1,954 crore, and stake from the port’s promoter—DVS Raju and family—for Rs 3,600 crore.
Adani Ports also said it will partner Sri Lanka’s John Keells Holdings to develop the west container terminal in Colombo.
As many as 21 of the 26 analysts that track the stock have a ‘Buy’ recommendation with four saying ‘Hold’ and one with a ‘Sell’ rating. Based on the 12-month Bloomberg consensus data, the stock has a return potential of 5.8%.
Dr Reddy’s Laboratories
After six straight quarters of gains, the drugmaker, which was one of the best performers of 2020, ended as the top laggard on the Nifty 50 index in the quarter ended March, declining 13%.
That was its worst quarterly performance since the quarter ended March 2018. This was also the third instance in the last five years, when the stock declined over 10% in the first three months of a year.
The company expects volume growth outlook for its U.S. generics business to improve in FY22 as demand for hospital products revives, according to a Nomura note dated March 19.
The firm also sees the recent underperformance of the stock resulting in a favourable risk-reward ratio.
As many as 36 out of the 42 analysts tracking the stock have a ‘Buy’ recommendation, five say ‘Hold’ while one has a ‘Sell’ call. Based on the 12-month Bloomberg consensus data, the stock has a return potential of 20.5%.
Divi’s Laboratories
The best-performing stock on the Nifty 50 index in 2020 began the first quarter of 2020 on a tepid note, declining 6%. Most of the decline was witnessed in January—during a period when the company posted its first loss in seven quarters.
Motilal Oswal thinks the company can capitalise on opportunities in the carotenoid space. The firm expects sales to grow at an annualised rate of 27% over FY20-23, driven by enhanced product offerings and increased utilisation.
As many as 18 out of the 22 analysts that track the stock have a ‘Buy’ recommendation, one said ‘Hold’ while three have a ‘Sell’ rating.
Based on the 12-month Bloomberg consensus data, the stock has a return potential of 14.6%.
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