 "50-day report: Three-fourths of BSE 500 stocks in the red")
Prime Minister Narendra Modi's unexpected cash ban announcement wreaked a havoc on the economy and Dalal Street alike, with three of every four BSE500 stocks reporting negative returns since the November 8 announcement of revoking the legal tender status of Rs 500 and Rs 1,000 currency notes.
Data showed the BSE500 index lost 5.2% to 11,036 points between November 8 and December 30 — the 50-day period which PM Modi had sought to restore the economy and ease liquidity condition. A total of 373 index stocks, many from sectors sensitive to cash economy, plunged up to 36% during the same period.
The fall is broadly in line with a 3 -4% drop seen in equity benchmarks Sensex and Nifty50 during the same period.
Among the key losers were Manappuram Finance (down 35.5%), Dalmia Bharat (down 33.6%), Delta Corp (down 31.8%) and Unitech (down 30.8%) during the 50-day period.
Stocks from cement, housing and related sectors declined amid fears cash ban may hit these sectors the most given the likely slump in housing demand due to cash ban.
Forty-two stocks, including Gujrat Pipavav, Amtek Auto, M&M Financial Services, Shriram Transport, Heidelberg Cements, India Cements, Century Ply, Yamini Invest and Crompton Greaves etc lost between 20% and 30%.
Over 135 stocks on the BSE-500 fell between 10% and 20%. Cement stocks such as JK Cements, India Cements, and Orient Cement incurred losses in double digits between 12% to 34%.
Dipen Sheth, Head - Institutional Research at HDFC Securities says he is cautious on the cement pack as valuations are still running high despite the fall. "We are cautious on cement, where valuations were running high, and fuel and coal prices were firming up, performance (vol/price) assumptions were unrealistic and continue to be so despite the fall," says Sheth.
Among 36 Finance stocks in BSE500 index, as many as 23 lost over 10%. Manappuram Finance (down 35.5%), Yamini Invest (down 29.2%), Bharat Financial (down 27.5%), Shriram City Union (down 25.4%) and JM Financial (24%) plunged the most.
"While demonetisation will have a short-term impact on all NBFCs, we believe some are structural outperformers, and for these, the impact should be limited to 1-2 quarters, said brokerage Motilal Oswal Securities in a research report dated December 07.
"We believe growth and profitability will be back to normal for most of these companies in the next 2-4 quarters. While we cut our FY17/FY18 earnings estimates and our target prices, we believe the recent price correction offers a good entry point for most companies," the brokerage added.
Meanwhile select stocks such as Swan Energy, Engineers India, KRBL, Adani Transmission, NALCO, Shilpa Medicare, Balmer Lawrie, Sonata Software, and Mindtree advanced 18% to 33% during the period mentioned.
Divi’s Labs was the worst-performing stock on the BSE-500. Its fall, however, had more to do with regulatory hurdles the company has been facing right now.
