With the broader market indices touching new peaks, it is easy to assume that equities are into a never ending rally. But a closer look at the individual stocks reveals that the rally is quite narrow. Just about 18 per cent of the stocks listed on the BSE are trading closer to their lifetime high. Stocks with a market capitalisation of ₹100 crore or more only have been considered for this analysis.
The current prices of the remaining 82 per cent of the listed stocks are at least 10 per cent below their lifetime highs. For many, the deviation is huge: 59 per cent of stocks are trading at least 25 per cent lower than their peak points in the past. About 35 per cent of the stocks are at least 50 per cent below their highest levels.
Going by the market capitalisation, the large-cap stocks have more sizzling bets than the mid- and the small-cap ones. While the broader market indices of mid-cap and small-cap companies have soared to fresh highs (BSE Midcap and SmallCap indices), the index levels barely speak for their constituents.
AMFI classifies the top 100 companies by market capitalisation as large-cap, the next 150 as mid-cap and the remaining as small cap.
While 68 per cent of the large-cap stocks are near their lifetime peaks, only 48 per cent of the mid-cap companies have achieved that feat. Small-cap stocks performed more poorly, with only 12 per cent currently trading at their all-time highs.
However, size is not the only factor at play. Even among the top 100 stocks by market capitalisation, popular names such as DLF, Coal India and ONGC are way behind their peak prices — currently trading at one-third of their peak prices. ITC is another big name that is currently trading at 40 per cent below its lifetime high of ₹353 apiece (in 2017).
While most sectoral indices have soared to fresh highs during the year, a few such as real estate and power are yet to surpass their lifetime highs. While the BSE Realty index soared to an all-time high level of 13647 during its prime in the 2008 bull run, it is currently trading 75 per cent lower.
Similarly, BSE Power that touched new peaks in 2008 is 38 per cent lower now.
Auto stocks that continued to hog limelight up until 2017, plummeted in the following years as the industry went into a downcycle due to multiple factors. With automobile sales still reeling under pressure, the BSE Auto index is yet to see a complete rebound. The index is now trading 15 per cent lower than its peak levels in December 2017. All six large-cap automobile manufacturers are trading below their highs. Despite being the market leaders in the automobile space, the stocks of Tata Motors and Maruti Suzuki are 51 per cent and 32 per cent lower than their respective highest levels reached in 2015 and 2017.
Investors get picky
Unlike earlier bull runs where the markets generally followed the flavour of the season, this time around, investors have been extremely picky. Even among the sectors that rallied, many prominent names have been beleaguered on account of issues around corporate governance or poor financial metrics, or weak outlook.
While the BSE Bankex skyrocketed to fresh highs this year on the back of healthy credit offtake, stocks such as Bandhan Bank and IndusInd Bank trade at 61 per cent and 51 per cent below their lifetime highs (2018), respectively. The recently restructured YES Bank and UCO Bank (that was moved out of the PCA framework just last week) are now more than 90 per cent lower than their highs.
Another example would be the recent commodity upcycle that had a stormy effect on many stocks. Even within the metals and mining space investors have differentiated. Stocks such as NMDC, SAIL, and Hindustan Copper are still trading 59-82 per cent lower than their highs since 2007-2010.
PSU stocks have been hammered across sectors. Popular PSU names despite being the behemoth in their respective sectors such as Coal India, ONGC, BHEL, NTPC, IOCL and Gail (India), have not benefited at all from this bull run.