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Last Updated : Apr 03, 2020 07:21 AM IST | Source: Moneycontrol.com

COVID-19 jolt: 474 smallcaps, 48 midcaps crack over 50% in FY20

Experts feel the volatility is expected continue at least till the receding of coronavirus cases globally and the finding of vaccine for the virus.

Sunil Shankar Matkar

While benchmark indices were completely hammered down in March, the broader market took a bigger knock. The sentiment on the Street has been sombre since the outbreak of coronavirus but in the past 2-3 weeks situation has become grimmer in India.

In March, Sensex and Nifty fell more than 33 percent each from their record highs formed in January. In the financial year 2019-20, the fall was 24 percent and 26 percent, respectively.

In FY20, BSE Midcap index fell 32 percent and Smallcap index declined 36 percent, and several stocks hit multi-year lows.

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Mid and smallcap stocks were in fact already under pressure before COVID-19 started to spread. Some of the reasons being - DHFL crisis, NPA concerns, slowdown in major sectors like auto and real estate, and US-China trade tensions.

Among midcaps, 83 percent stocks closed the financial year 2020 in the red with 113 stocks falling in double digits.

Out of 113 stocks, 48 plunged 50-90 percent. The list includes Thomas Cook, Future Retail, PNB Housing Finance, Edelweiss, RBL Bank and Quess Corp.

Table: 20 stocks that saw the worst fall

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On the other hand, 26 stocks closed FY20 in the green. Of which 19 stocks gained in the range of 10 percent to 112 percent.

In the smallcap index, more than 93 percent stocks were caught in the bear grip with 733 stocks closing with double-digit losses.

Out of 733 stocks, 474 crashed 50-99.6 percent during the year.

Table: 20 smallcap stocks that lost the most

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However, 53 stocks were gainers including Adani Green Energy, Abbott India, GMM Pfaudler, Navin Fluorine, Gujarat Gas, Relaxo Footwears, Amber Enterprises, Ipca Laboratories, MCX, Trent, Dr Lal PathLabs, Tanla Solutions, Mishra Dhatu Nigam, Granules India, Pfizer, AstraZeneca, RITES, Narayana Hrudayalaya, SRF, etc. gained 10-312 percent.

Experts feel the volatility is expected to continue at least till the receding of coronavirus cases globally and the finding of vaccine for the virus, but the bottom is yet to be formed given the fast-rising cases in the United States. Hence, they advise buying stocks in a gradual manner to take the maximum benefits when the actual recovery starts.

"My advice to the clients is that do not expect V-shaped recovery immediately. The markets/asset classes will consolidate for 5-6 months. There will be volatility. The economy will take longer to recover," Prasanna Pathak, Fund Manager – Equity of Taurus Mutual Fund told Moneycontrol.

"However, since equity markets tend to discount the next 2 years earnings, recovery in the markets may be quicker. It is difficult to find a bottom and hence invest systematically. Use the next 3-6 months to invest in good stocks, mutual fund schemes etc," he said.

A patient investor with a 2-3 years time horizon is bound to generate handsome returns by investing in these times of uncertainty and fear, he feels.

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First Published on Apr 2, 2020 02:53 pm
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