News Analysis

A great year for Sensex, but dismal for most stocks

Anand Kalyanaraman BL Research Bureau | Updated on December 30, 2019 Published on December 30, 2019

The 15% gain made by the bellwether index was driven by a handful of large caps even as 80% of the stocks on the BSE slipped in 2019

While the bellwether Sensex at 41,575 scaled new highs in 2019 with 15 per cent-plus gain, the rally has been narrow and driven by a handful of large-cap stocks.

In contrast to the 30-stock Sensex’s strong show, most listed stocks have not been able to keep their heads above water in the year gone by. Nearly 80 per cent of the 2,277 stocks quoting on the BSE since the last year have lost value in 2019; just about one in five have gained. The BSE Mid-cap index is down 3 per cent, while the BSE Small-cap index lost close to 8 per cent.

 

About 1,240 stocks, or more than half the listed universe, have slipped at least 25 per cent over the year, and about 480 — more than a fifth of the listed space — are down 50 per cent or more. Down the pecking order, about 60 stocks lost 80 per cent or more, and about 30 have been nearly decimated with a decline of over 90 per cent in their value.

In contrast, over the year, about 340 stocks (15 per cent of the listed stocks) gained 10 per cent or more, about 220 (less than 10 per cent of the total) rallied 25 per cent or more, and just 40 doubled or more.

The losers have outnumbered the winners in 2019 due to several factors. These include the continuing weak earnings growth of India Inc, debt troubles faced by many companies, global trade war tensions, competitive squeeze, corporate governance issues, deceleration in economic growth, and some provisions in Budget 2019-20 that were perceived as being market-unfriendly.

The partial rollback of the increase in capital gains tax surcharge introduced in the Budget in July, and later, the corporate tax rate cut, helped improve sentiment, but not across the board. Over the year, the money has mostly chased a few blue-chip large-cap stocks and pushed up the Sensex.

The big winners in this category include Bajaj Finance (up 61 per cent), ICICI Bank (up 53 per cent), Reliance Industries (up 38 per cent), Asian Paints (up 32 per cent), HDFC (up 24 per cent), HDFC Bank (up 20 per cent) and TCS (up 16 per cent).

Notable losers

The worst performing stocks — that have lost more than 90 per cent in 2019 — include known names such as Cox & Kings, Talwalkars Healthclubs, Talwalkars Better Value Fitness, McLeod Russel, Dewan Housing Finance, Ballarpur Industries, and Anil Ambani group entities Reliance Communications, Reliance Capital, Reliance Infrastructure and Reliance Home Finance. These stocks were mostly hammered by their debt troubles and rating downgrades.

The stocks of Coffee Day Enterprises and Sical Logistics also lost close to 90 per cent, driven down by the debt troubles that came to light after the demise of promoter VG Siddhartha. The HDIL stock, already on a downtrend, was pounded further after news came of the involvement of its promoters, Rakesh Wadhawan and Sarang Wadhawan, in the PMC Bank fraud; the stock is down nearly 90 per cent in 2019.

Other notable losers include YES Bank and Vodafone India that are down nearly 75 per cent each — the former due to its high level of non-performing assets and capital infusion woes, and the latter due to competitive squeeze and adverse court rulings that increased its losses. These stocks moved down from the large-cap to the mid-cap counters.

Big gainers

Amidst the broadbased losing spree, there were some outsized gainers, too, that have tripled or more. This list is dominated largely by unknown micro-cap stocks such as trading firms Best Agrolife (up 21 times) and ABans Enterprises (up 13 times) and engineering company A&M Febcon and Leading Leasing Finance (up more than 300 per cent).

Many of these multi-bagger micro-caps have been assigned higher risk groups such as ‘XT’ by the BSE, indicating greater attention from a regulatory monitoring standpoint. Investors should tread with caution.

Just one stock in the large-cap category (HDFC AMC) doubled in 2019; the company’s good financial performance and market leadership position helped the stock rally. Its peer Reliance Nippon Life AMC, a mid-cap stock, also doubled on the bourses, aided by a change in ownership.

From the IPOs that hit the market in 2019, IRCTC was among the biggest gainers, with the stock nearly tripling so far from its offer price.

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Published on December 30, 2019
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