Even as Indian markets are set to report the first calendar year fall after three years, 282 or more than half the stocks that comprise the S&P BSE 500 Index posted positive returns, while the S&P BSE 500 Index declined one per cent on Tuesday. The S&P BSE Sensex has dipped five per cent, thus far, in CY15.
Of these, 31 stocks gained more than 100 per cent during the year. Rajesh Exports, SpiceJet, Tata Elxsi, Force Motors, Kwality, Gayatri Projects and 8K Miles Software Services were some of the stocks that doubled in 2015.
Thirty-nine stocks rallied between 50 per cent and 100 per cent. At the same time, 93 stocks gained between 20 per cent and 50 per cent. The remaining 119 stocks were up less than 20 per cent in CY15.
Pharmaceuticals sector was the best performing with 37 stocks gaining in 2015 over previous year. It was followed by information technology (22 stocks), capital goods (18), and finance excluding banks (18) and fast-moving consumer goods (15 companies).
Rajesh Exports, the biggest gainer in the pack, has appreciated 375 per cent from Rs 142 to Rs 677. The gold jewellery manufacturer had posted 108 per cent y-o-y growth in net profit at Rs 894 crore for trailing 12 months ended September 2015. SpiceJet gained 323 per cent from Rs 17.20 to Rs 72.80. The aviation company managed to turn profitable from the June 2015 quarter.
On the other hand, banking, oil & gas and metals have underperformed the market by falling up to 60 per cent thus far in 2015. Bank of India, Vedanta, Oriental Bank of Commerce, Aban Offshore, Indian Bank, Hindalco Industries, Punjab National Bank and Cairn India have seen their market value erode by over 40 per cent.
Though analysts remain bullish on the road ahead for the markets, they warn against the steep rise in stock prices in the mid-and small-cap stocks, and advise investors to tread cautiously.
However, companies with niche business offerings or in a turnaround mode will see heightened interest. Focused companies in niche businesses are able to move up the value chain and compete effectively against larger peers, analysts say.
“We continue to caution investors to avoid buying the small-cap stocks, which are in bubble zone. I believe there is a madness in many small-cap stocks and in a deflationary scenario, they can fall as much as 90 per cent in value,” says G Chokkalingam, founder & managing director, Equinomics Research & Advisory.
R Sreesankar, head of institutional equities at Prabhudas Lilladher expects the earnings growth to be led by financials, oil & gas, FMCG, pharma and IT sectors. “While the private sector banks continue to deliver as per expectations, the PSU banks keep facing newer challenges. Overall, going forward, we expect the slippages in the financial services sector to be on the lower side than what we saw in FY15,” he says.
Hexaware Technologies, Jubilant Life Sciences, Sadbhav Engineering, Allcargo Logistics, JK Lakshmi Cement, VA Tech Wabag, NIIT Technologies, VRL Logistics and Ashoka Buildcon are his top picks in the mid-cap segment.