The Hindu Business Line : Sub-50 stocks hog limelight in recent rally

BL Research Bureau If you could have picked stocks on November 20, when the Sensex fell to its recent low of 8500, which sectors would you have chosen? Well, sector choices didn’t matter much. As long as you picked a stock that traded below Rs 50, chances are you would be sitting on an impressive gain today!

Anant Raj Industries, GVK Power, Gammon Infrastructure and Dish TV have been the star performers in the stock market rally since November, posting a 40-70 per cent gain within a month. The sectors range from realty and media to retailing and sugar. This suggests that the absolute price at which these stocks traded, rather than the prospects for each sector, may have driven buying interest. A return analysis of BSE 500 stocks shows that 84 of these gained more than 20 per cent. And 141 stocks traded below Rs 50 as of November 20 posted average returns of 25 per cent between November 20 and December 18 — almost twice the BSE 500’s return of 13 per cent during this period.

The stocks that traded below Rs 50 included many with face value less than Rs 10 — for example, Dish TV (face value Re 1), GVK Power (FV Re 1), Bajaj Hindusthan (FV Re 1) and Amtek Auto (FV Rs 2) — making them not exactly cheap on absolute price. However, that clearly didn’t deter the enthusiastic investors.

It needs to be mentioned here that the recent recovery in stock markets has been accompanied by a revival in retail trading interest. Transaction volumes in small and mid-cap stocks have surged. FII selling too has abated to some extent, with FIIs indulging in net purchases of Rs 1,300 crore so far this month.

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