Bear and bull statues stand outside the Frankfurt Stock Exchange, operated by Deutsche Boerse AG, in Frankfurt, Germany. (Photographer: Alex Kraus/Bloomberg)

Large Caps Stand Out Amid Slew Of Stock Downgrades

Analysts expect large caps to continue driving Indian markets.

Companies with a market capitalisation of more than Rs 1 lakh crore have seen maximum upgrades in their target price last month, according to Bloomberg data on 405 stocks tracked by at least five analysts. For small and mid caps, downgrades outnumber upgrades.

That’s in line with the trend so far this year. While India’s benchmark hit all-time highs, that masks the volatility on the broader market.

The Nifty Smallcap 100 Index and the Nifty Midcap 100 Index were down 18 percent and 10 percent, respectively, this year. That compares with a nearly 8 percent gain in the NSE Nifty 50 Index. The Nifty touched a record of 11,390.55 yesterday. It rose 6 percent in July compared with a 4 percent and 3.8 percent gain in the small cap and mid cap indices, respectively.

Foreign investors, too, turned net buyers of Indian equities in July after three months of selloff.

Also read: Foreign Investors Make A U-Turn On Indian Stocks

“The upgrades or downgrades are driven more by the future outlook than by the outcomes of results,” Mahantesh Sabarad, head of retail research at SBICAP Securities, said. “The upgrade in large caps has been driven by the same phenomenon except that the business outlook is getting better in IT, FMCG and BFSI (banking, financial services and insurance) space as cyclical pressures ease and base effect shows up.”

Here’s how the analysts revised their target prices for the month of July.

Large Caps Stand Out Amid Slew Of Stock Downgrades

There are 28 companies with market capitalisation of more than Rs 1 lakh crore. Of this, 68 percent stocks witnessed an upgrade in their target price.

Large Caps Stand Out Amid Slew Of Stock Downgrades

Of the 32 companies with market capitalisation between Rs 50,000 crore and Rs 1 lakh crore, target price of 56 percent stocks were downgraded.

Large Caps Stand Out Amid Slew Of Stock Downgrades

Of the stocks having market capitalisation between Rs 5,000 crore and Rs 50,000 crore, more than half were downgraded in July.

Large Caps Stand Out Amid Slew Of Stock Downgrades

Total number of companies with market capitalisation of less than Rs 5,000 crore stood at 145. Of this, target price of nearly half of the stocks were revised downwards in July.

Large Caps Stand Out Amid Slew Of Stock Downgrades

Top Five Stock Upgrades

Three of the top five stock upgrades were from the Nifty 50 basket.

Large Caps Stand Out Amid Slew Of Stock Downgrades

Top 5 Stock Downgrades

Top five stock downgrades were from the small- and mid-cap space.

Large Caps Stand Out Amid Slew Of Stock Downgrades

Also read: Nifty’s Rally To Record Has An Eerie Similarity With 2008-Peak