For Indian Stocks, Dry Spell Continues For A Second Straight Year
Indian markets are on track for their longest winning streak since 2007, gaining for a fourth successive year and shrugging off concerns over falling GDP growth, a non-bank lending crisis and uncertainty about the U.S.-China trade war.
Still, more than half of the stocks lost money as the sentiment in 2019 swung between extreme optimism and pessimism. While the Sensex gained 12 percent, it was driven by a few heavyweights even as the broader market declined. That’s the second straight year of lacklustre performance for stocks with just four mega wealth creators or stocks that doubled investor money.
- Companies with market capitalisation of at least Rs 1,000 crore.
- Tracked by at least five analysts.
Of the 169 companies that returned gains, more than a third (58 companies) underperformed the benchmark S&P BSE Sensex’s 11.9 percent rise. And just four doubled investor money.
Here are the best and worst performers.
Reliance Nippon Life AMC And HDFC AMC
- A huge potential from the under penetrated Indian markets.
- Retail-focused business model and a wide array of services and product offerings
- Focus on affordable housing in rural and semi-urban locations in western and central India gives it a long runway for growth.
- Strong asset quality, presence in less competitive segments.
- Growth to come from existing locations (92% of portfolio from four states) as well as expanding to newer geographies.
- Growth opportunity in micro finance loans.
- Consistent track record of in strategy and execution.
- Best placed in the space with aggressive provisioning policies.
- Falling product prices due to weak steel demand.
- Lifting of anti-dumping duties on graphite electrodes imported from China.
- Pressure on margins to increase in average needle coke prices.
- Supreme Court order to pay pending dues.
- Declining subscriber base.
- Lower ARPUs due to downtrading.
Indiabulls Housing Finance
- Worsening group debt.
- Credit downgrades from rating agencies.
- Increase in below-investment grade book.
- Over half of new NPAs outside watch list.
- High leverage.
(Reasons for performance compiled from reports by brokerages including CLSA, Citi, IIFL and Emkay Global)
(Corrects earlier version to update number of outperformers in second paragraph.)