A study of all BSE-listed stocks with a market capitalization of at least Rs 1,000 crore throws up a list of 115 stocks that have fallen at least 40% from peaks. Out of them, there are at least 12 recent multibaggers that are having a tough time now.
Defence PSU stock Cochin Shipyard, the shares of which have fallen 54% from peak, are still up 176% in the last one year. Waaree Renewable Technologies, which was in focus recently as its group company Waaree Energies got listed on stock exchanges on Monday, has lost almost 53% of its value. The solar play remains a four-bagger in the last 12 months.
Other stocks in the list include PSUs like HUDCO, Bharat Dynamics and IFCI and private players like Unitech, Cupid, Lotus Chocolate and Dolphin Offshore Enterprises.
While most of the PSUs and capex plays have healthy order book and growth visibility, the correction is largely attributed to profit booking amid expensive valuations.
Retail investors, who have been buying the dip in some of these widely popular stocks, are now nursing their wounds as there are little chances of a recovery in the short term.
“While it is difficult to predict the bottom, we believe this space will continue to consolidate for some time as the valuations are ahead of the fundamentals. There could be improvement in sentiments once the buzz around the Budget picks up in January next year,” Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services, told ETMarkets.
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In the last one year, Nifty Smallcap index is up 45% and outpaced Nifty’s 27% growth.
“Even if we have 5-10% correction from the top, we would still be in a very bullish zone. If somebody has taken a 20-30% correction, the indication is that the direction of their portfolio is misallocated,” Anurag Singh, Managing Partner, Ansid Capital, said.
He suggests that investors should relook at their portfolio and see that at least 50% is in the largecaps and then about 30% is in mid and small, and about 20% is in bond or fixed income.
The pause in the momentum in the market comes alongside a pause in earnings growth rates as well. September quarter results have already started making analysts suggest that the Indian economy could be facing a broad-based slowdown.
“The weaker-than-expected 2QFY25 results coupled with weak management commentary and guidance in the consumption-oriented sectors have resulted in modest earnings downgrades in Nifty-50 Index stocks as well as the broader consumption basket. As a result, we currently expect 5% and 17% growth in net profits of the Nifty-50 Index in FY2025 and FY2026,” said Sanjeev Prasad of Kotak Institutional Equities.
Despite the recent price corrections, the brokerage doesn’t find value in most parts of the market as valuations are very rich in the consumption, investment and outsourcing sectors on both absolute and relative basis and valuations do not take sufficient cognizance of emerging risks to profitability and volume expectations across sectors.
After a slow first half in FY25, analysts are expecting acceleration in the next two quarters.
“What this loss of momentum to me is largely because generally Q1 and Q2 are slower quarters, but also because of elections the government has not been able to spend on capex as much that they had budgeted. Spending is down 35% year-on-year or compared to what was budgeted and I think that is causing a little bit of a slowdown in the economy, apart from other reasons,” said Alchemy Capital’s Hiren Ved.
(Data: Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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