Markets rebound: Broad rally lifts almost all stocks

About 90 per cent of BSE 500 stocks gained over past month

Nearly 90 per cent of the stocks in the BSE 500 index, which accounts for 95 per cent of the country’s market capitalisation, have risen from the levels in early September when the benchmark indices had declined to 15-month lows.

About half the BSE 500 stocks have outperformed the benchmark indices, which are up nine per cent in the past month.

On September 7, the benchmark Sensex had closed at 24,894, down 16 per cent from its 2015 high of 29,682 on January 29. This was due to a global sell-off in emerging markets on fears of a China-led global slowdown and uncertainty over a US interest rate increase. On Wednesday, the index closed at 27,036, up eight per cent from its September low.

The BSE 500 index is up eight per cent in a month but a tenth of its component stocks have rallied more than 20 per cent. Beaten-down metal, infrastructure and power stocks are among the biggest gainers. Metalyst Forgings is up 81 per cent, Lanco Infratech has gained 75 per cent and Jaiprakash Associates has rallied 45 per cent. All these had earlier fallen sharply from 2015 peaks.

“The fall in global commodity prices and a much-awaited interest rate cut by the Reserve Bank of India have had a positive impact on many companies. Now, it is time for the government to deliver. If that happens, the market could see more upside,” said Dharmesh Mehta, managing director and chief executive officer of Axis Capital.

“Our market is poised for a massive rally. The Sensex is likely to rise 30 per cent from current levels by December 2016,” said G Chokkalingam of Equinomics Research & Advisory. “The rally will be led by mid-sized companies, as they will see the highest margin expansion due to a fall in commodity prices and easing of interest rates,” he added.

On September 29, the Reserve Bank of India had eased the repo rate by half a percentage point to 6.75 per cent. In recent weeks, the government is considered to have shown a resolve to push reforms in the power sector and on the goods and services tax.

“Globally, there has been some respite for the markets and commodities. Major concerns such as the China slowdown and the US interest rate hike are still not off the table. Our markets will remain correlated to what is happening globally,” said Piyush Garg, chief investment officer, ICICI Securities.