Moneycontrol
Dec 06, 2017 08:44 AM IST | Source: Moneycontrol.com

Stay with winners! Nifty falls 372 points from record highs; 20 stocks which rose 20-40%

Even if BJP does win Gujarat election we could see a sigh of relief but if the results disappoint then chances of a big cut could be on cards, suggest experts.

Kshitij Anand @kshanand

The bull’s part fizzled out soon after the benchmark indices hit record highs back in the month of November. The S&P BSE Sensex slipped over 1,000 points from its record high of 33,865 while the Nifty50 dropped 372 points from its record high of 10,490 recorded on November 6.

The index did make a recovery but the trend started drifting lower post November 20. The Nifty50 now trades below key short-term moving averages but there was plenty of stock specific action which kept traders busy throughout the period.

The Nifty50 hit a record high of 10,490 on November 6 but as many as 20 stocks gave returns in the range of 20-40 percent in the same period, according to data collated from Capitaline.

Stocks which outperformed Nifty50 in the last one month includes many small and midcap names such as Jai Corp, Praj Industries, Minda Industries, Vakrangee, McLeod Russel, Sonata Software, Religare Enterprises, L&T Technology, VIP Industries, La Opala, Coffee Day Enterprises etc. among others.

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After a sharp rally seen in the first 10 months of the calendar year 2017, most analyst were expecting the rally to take a halt in the month of November and December.

There are many events lined up for the month of December which could halt rally on D-Street at least in the short term. Nervousness on D-Street is clearly visible ahead of key events such as RBI policy outcome, US Fed Monetary policy review, as well as the outcome of state elections, suggest experts.

The market is likely to stay rangebound until the time state election results especially Gujarat election results are out; hence, a big rally or a Santa Claus rally might have to wait for another year.

Even if BJP does win Gujarat election we could see a sigh of relief but if the results disappoint then chances of a big cut could be on cards, suggest experts.

“We do not expect a win by Modi to move the markets up or have too much of an upside based on this news alone but a loss and upset from BJP could take the markets lower,” Nikhil Kamath, Co-founder & Head of trading, Zerodha told Moneycontrol.

“Looking at the market, we believe this inherent weakness in the market will continue and we expect the market to move lower into the 10,000 to 10,100 region in the coming expiry, i.e. the December expiry,” he said.

In the short term, it is essential for investors to opt for bottom-up ideas which can offer superior value in terms of their valuation. Many stocks did correct up to 20 percent in the last one month, but investors must do their research before putting their money.

Many stocks fell up to 20 percent in the Nifty500 index which includes names like Marksans Pharma, Reliance Communications, Lupin, MTNL, Welspun Corp, GSFC, Aurobindo Pharma, Vedanta, Cadila Healthcare, Punjab National Bank, Suzlon, Tata Motors, MMTC, Hindalco Industries, Power Finance Corporation etc. among others.

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Despite the sharp correction, analysts feel that the Bull Run remains intact and investors should be focused on building their portfolio with quality stocks. Investors should use these dips to accumulate quality stocks.

“We continue to believe that Indian markets are in a phase of a secular bull run. Hence, even if there are event-based intermittent corrections in the Indian markets, the long-term trend remains bullish,” Prasanth Prabhakaran, Senior President & CEO, YES Securities (India) Limited told Moneycontrol.

“These events in the immediate future could be the outcome of the state elections or the US Fed policy review but we firmly believe that it will not reverse the overlying trend of upward asset values,” he said.
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