Asian Paints to Infosys: 70 stocks that surged up to 40% since Budget 2019

Proposals under Union Budget 2019 to impose a surcharge on foreign portfolio investors (FPIs) and a 20 per cent tax on share buybacks, trade-tariff salvos between the United States and China, and a collapsing domestic economy that hit a six-year low in the June quarter brought stock markets to their knees.

At the bourses, indices have cracked since the presentation of the Budget. The S&P BSE Sensex and the Nifty50 have slipped 8 per cent, each, while the S&P BSE 500 has lost 9 per cent during the period under review.

Despite this, about 70 stocks, including Hathway Cable and Datacom, HDFC Asset Management Company, Asian Paints, Torrent Pharmaceuticals, Infosys, Dr Lal Path Labs, and ICICI Prudential Life Insurance, on the S&P BSE 500 have outperformed the benchmarks by rallying up to 41 per cent.

Among the outperformers, most of the pharmaceutical firms, paint companies, and information technology companies have defied the fall in the market.

Consider this: In the past three months, Godfrey Phillips, Zydus Wellness, Reliance Nippon Life Asset Management, HDFC AMC, Sun Pharma Advanced Research Company and Hathway Cable and Datacom have surged between 20 – 41 per cent.

Moreover, about 14 stocks, including HDFC Life Insurance Company, Dabur, NIIT Technologies, Infosys, Torrent Pharma, Asian Paints, and Berger Paints, have rallied up to 16 per cent.

That apart, Foreign Institutional Investors (FIIs) have increased their stake in insurance firms by up to 351 per cent, ACE Equity data shows. READ MORE HERE

Each of these sectors, analysts say, have global reasons to shine.

“Paint companies, pharmaceuticals, and IT firms are the select few sectors that are performing well in an overall weak market due to favourable global factors… A weak rupee worked for all the IT firms, and low oil prices have contributed towards gains in the paint companies,” says G.Chokkalingam, founder and managing editor, Equinomics Research. He adds that prices for pharmaceuticals firms have bottomed-out, helping them log gains.

In the past three months, the S&P BSE IT index has gained 6 per cent, followed by marginal gains of 0.4 per cent in the S&P BSE Healthcare. The S&P BSE Consumer durables index, however, plummeted 11 per cent during the same period.

Fundamentally, pharmaceutical companies reported a healthy June 2019 quarter. “The expectations were largely exceeded on EBITDA (earnings before interest, tax, depreciation and amortisation) margins and most of the companies reported revenues in-line with the expectations,” analysts at Centrum Broking wrote in a quarter-review note. Earning leaders in the Q1FY20 quarter were Abbott, Biocon, Lupin, Sun Pharma, Aurobindo and Dr Reddy Labs, while draggers were Aarti, Sanofi, FDC and Cipla, they said.

Furthermore, Hindustan Unilever, Dabur, and Nestle – which rose 3, 10, and 7 per cent in the past three months – recorded volume growth of 5 per cent, 9.6 per cent, and 11.4 per cent, respectively despite the slowdown in the consumption space.  

Asian Paints and Berger Paints, too, clocked double-digit growth of 16 per cent and 12 per cent, respectively.

TIME TO PICK VALUE STOCKS?

Going ahead, analysts caution investors, to pick value stocks in the consumption, construction, sanitary, hardware, and IT sectors.

“Investors should continue to buy selective mid-cap stocks like Torrent Pharma, Alembic Pharma, HDFC Life, etc that have outperformed the frontline indices” says Gaurang Shah, head of research at Geojit BNP Paribas.

He adds that the possibility of the government announcing relief measures for the real estate sector opens the avenue for investors to add paint, sanitary, pipe (hardware) companies to their portfolio.

Over the past two weeks, Finance Minister Nirmala Sitharaman has announced a slew of measures to arrest the slowdown in the economy. READ MORE HERE

Chokkalingam of Equinomics Research corroborates and says that stocks have “corrected beyond the value they deserve”, and investors must pick stocks for long-term that are better in terms of governance, management, and leverage position. 

 

Company	Price as on Sep 3 (in  Rs)	Change (%)
Hathway Cable & Datacom	32.20	40.9
Sun Pharma Advanced Research Company	157.70	32.9
HDFC Asset Management Company	2649.75	31.7
Reliance Nippon Life Asset Management	282.35	27.5
Zydus Wellness	1659.85	21.3
Godfrey Phillips India	1003.00	20.5
Asian Paints	1576.50	15.9
Berger Paints India	362.65	13.2
Can Fin Homes	404.30	12.9
Apollo Hospitals Enterprise	1494.00	12.7
Sun Pharmaceutical Industries	439.45	12.1
Torrent Pharmaceuticals	1714.45	11.1
Eveready Industries (India)	77.90	11.0
Infosys	814.30	11.0
Dr. Lal Pathlabs	1186.10	10.3
Gujarat State Petronet	214.15	10.3
NIIT Technologies	1473.65	10.2
Pidilite Industries	1347.80	9.8
Dabur India	442.45	9.8
HDFC Life Insurance Co	536.55	9.7
Indraprastha Gas	328.65	8.7
Colgate-Palmolive (India)	1248.75	8.4
Ajanta Pharma	1018.20	7.9
Swan Energy	112.75	7.5
ICICI Prudential Life Insurance Company	423.45	7.5
CreditAccess Grameen	554.30	7.3
SBI Life Insurance Company	811.80	7.2
Nestle India	12684.30	6.8
Alkem Laboratories	1839.85	6.6
HCL Technologies	1108.55	6.5
Sanofi India	6089.25	6.5
ICICI Lombard General Insurance Co	1190.95	6.0
Abbott India	9428.80	5.8
Bata India	1539.10	5.7
TV Today Network	297.00	5.6
Gujarat Gas	172.25	5.6
Avenue Supermarts	1506.50	5.1
Tamil Nadu Newsprint & Papers	187.00	4.8
Phoenix Mills	683.00	4.7
Petronet LNG	264.10	4.6
Glaxosmithkline Pharmaceuticals	1239.60	4.5
Quess Corp	468.65	4.0
Hexaware Technologies	387.15	3.8
Spicejet	128.05	3.7
JB Chemicals & Pharmaceuticals	378.15	3.6
Marico	386.65	3.4
Kansai Nerolac Paints	456.65	3.1
Galaxy Surfactants	1298.05	2.8
Hindustan Unilever	1842.70	2.8
Fine Organic Industries	1423.55	2.4
Navin Fluorine International	722.25	2.3
MRF	57709.90	2.2
Adani Transmission	234.60	2.2
Glaxosmithkline Consumer Healthcare	7968.40	2.1
Natco Pharma	542.80	2.0
Multi Commodity Exchange Of India	878.60	1.7
Zee Entertainment Enterprises	361.00	1.3
Ipca Laboratories	960.85	1.2
Divis Laboratories	1639.60	1.2
Piramal Enterprises	1969.00	1.1
Prestige Estate Projects	290.20	0.9
Trent	451.95	0.8
JK Cement	1000.45	0.6
Tata Global Beverages	271.20	0.6
Max Financial Services	417.25	0.5
Tech Mahindra	704.30	0.5
Tata Consultancy Services	2252.25	0.4
Minda Industries	315.20	0.3
Mahanagar Gas	829.60	0.2
Whirlpool Of India	1602.40	0.1
Source: ACE Equity