News Analysis

Bouncing back: 1 in 2 stocks double from March 2020 lows

Keerthi Sanagasetti BL Research Bureau | Updated on March 20, 2021

But one in four still trade below the pre-pandemic market high in Jan 2020

The first anniversary of the market carnage is round the corner and the benchmark index Sensex paints a pretty picture, having surged 92 per cent from its low on March 23, 2020. The participation in the market rally has been wide, with 95 per cent (1,937 stocks) of the 2,039 actively traded stocks on the BSE in the green and 52 per cent at least doubling prices. The total market capitalisation of the actively traded scrips has surged by ₹100.2-lakh crore in this period.

However, about one in every four stocks that moved up since last March now trades at a price below that level it was in, when the Sensex touched its pre-pandemic high of 41952 points on January 14, 2020. And, 5 per cent of the actively traded stocks are still at levels below the March 2020 lows.

The sprinters

Prices of the top performers — Tanla Platforms, DigiSpiec Technologies and Intellect Designs — since March 2020 lows skyrocketed more than tenfold. Others such as Adani Enterprises saw a seven-fold increase.

Among the gainers in the bull run of the last year, 307 stocks rose over 100 per cent since their January 14, 2020 levels. The top five performers since January 14, 2020 are Tanla Solutions (1,187 per cent), Alok Industries (607 per cent), Adani Green (500 per cent), CG Power and Industrial Solutions (471 per cent), and Dixon Technologies (415 per cent).

In contrast, the benchmark index Sensex itself inched up just 18.8 per cent since its last high on January 14, 2020, while the broader market index, BSE 500, posted a gain of 22.6 per cent in the same period.

 

IT & Healthcare lead

With defensive segments doing well in the initial leg of the pandemic, IT and Healthcare sectoral indices saw handsome gains of 132 per cent and 87 per cent, respectively, from the March 2020 lows. BSE IT Index rallied the most since January 14, 2020, up 61 per cent. Even among the 307 stocks that rallied more than 100 per cent from their January 2020 levels, 29 companies were from the IT sector. Popular names include Ramco Systems, Persistent Systems, L&T Infotech and Mindtree. IT majors, Infosys, HCL Technologies and Wipro, too surged above 60 per cent from January 14, 2020.

The next obvious grosser was the healthcare sector — BSE Healthcare Index is up 50 per cent since January 14, 2020, with Laurus Labs and Aarati Drugs rising more than four-fold since mid-January last year.

Chemicals (including agro chemicals) sector too posted healthy returns — 37 companies such as Deepak Nitrate, Tata Chemicals, Linde India, Navin Fluorine International, Alkyl Amines and BASF India, more than doubled in value.

However, the BSE PSU and Oil and Gas indices have been slow marchers among the sectoral indices.

While the BSE PSU Index is still down 1.6 per cent from its January 14, 2020 levels, BSE Oil and gas and BSE Bankex inched up 3.4 and 5.3 per cent since January 14, 2020. With looming uncertainty over likely slippages and near halt in credit growth, leading private banks such as Axis Bank and IndusInd Bank trade lower than their pre-pandemic levels.

The auto sector too is yet to see complete recovery. While market leader Maruti Suzuki recovered from its March 2020 lows of ₹4, 213 apiece, the stock is yet to breach its mid-January 2020 levels. Other auto ancillary companies such as Gabriel India, Minda Corporation and Exide Industries still trade below their prices as on January 14, 2020.

With valuations of many stocks, especially in the defensive segments expanding, (BSE Healthcare and IT indices trades at 35 and 29 times PE, respectively) undervalued PSUs and other cyclicals (BSE PSU trade at a PE of 13 times) are taking the lead now.

Published on March 20, 2021

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