30% of BSE 500, BSE MidCap stocks still below June 4 levels despite market rebound

Since June 3, the Sensex and Nifty have each risen over 3 percent, while the BSE MidCap and SmallCap indices have advanced 5 percent and 10 percent, respectively. The BSE 500 index is up 4 percent.

While Indian indices have rebounded from the sharp losses on June 4 - triggered by the election results - nearly 30 percent of each of the stocks that are part of BSE 500 and BSE MidCap indices are yet to recover. Further, 50 percent of listed PSU stocks are also still lower than the June 4 levels.

Around 159 stocks from the BSE 500 Index and 41 stocks from the BSE MidCap firms remain in negative territory. Among the 102 listed PSU stocks, 49 are yet to recover from the June 4 decline. In the SmallCap segment, over 23 percent, or 220 stocks are still down.

Meanwhile, the benchmark indices, Sensex and Nifty, have each risen over three percent, since the huge fall in June. The BSE MidCap and SmallCap indices have performed better, advancing five percent and 10 percent, respectively. The BSE 500 index is up four percent.

Among BSE 500 and MidCap stocks, Thermax has been the hardest hit, down 23 percent since June 4, despite rallying over 147 percent since April 2023. Adani Total Gas and Adani Power have yet to recover 21 percent of their June 4 losses, although they surged 29 percent and 356 percent, respectively, since April 2023.

Other stocks, including Poonawalla Fincorp, RBL Bank, Equitas SFB, Jindal Stainless, RHI Magnesita India, and Macrotech Developers, are down between 17 percent and 20 percent since June 4, after gains of 40 percent to 275 percent since April 2023.

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Among small-cap stocks, Waaree Renewable Technologies is still down 40% since the June 4 fall, despite having rallied over 1,522% since April 2023. Other stocks, including Fusion Micro Finance, Sanghvi Movers, Spandana Sphoorty Finance, NDTV, RattanIndia Power, and Medicamen Biotech, are also down nearly 20% since June 4. However, these stocks have gained between 30-600% over the past year.

Analysts said the pre-election rally was driven by high hopes of a large majority by BJP but results were disappointing when compared with the street expectations.

Post the election results, markets started trading on ground realities, focusing on earnings growth, economic growth and a lot of things on a global stage like the US Fed interest rate revision, which got postponed month by months leading to Indian markets seeing lower FII inflows and eventually leading to underperformance in a lot of mid and small-cap stocks.

According to Prashanth Tapse, Senior VP (Research), Mehta Equities the recent Q1 earnings growth which are not as per street expectations are also contributing to lower price performance.

Meanwhile, several PSU stocks, including Hindustan Copper, Steel Authority of India, NMDC, Engineers India, Container Corp of India, and MOIL, remain 14-17% below their June 4 levels.

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Despite this, they have delivered returns of 100-300% since April 2023. Analysts observed that the recent surge in PSU stocks lacked substantial changes in fundamentals or reforms, indicating the rally was fueled mainly by bullish sentiment.

Kotak in its latest note highlighted that the rally’s lack of fundamental support and its significant outperformance compared to private sector peers reveal its flaws. Investors are advised to use this opportunity to exit most PSU stock positions, it stated.

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