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Last Updated : Jul 25, 2020 02:03 PM IST | Source: Moneycontrol.com

Market at over 4-month high with Sensex up 50% from March low; 45 stocks jump 100-340%

Another good point which happened in last four months was that advance decline ratio among majority of indices improved significantly. In BSE 500 itself, 94 percent stocks turned in the green from their March 23's prices.

Sunil Shankar Matkar

The Indian stock market registered a solid comeback since hitting rock-bottom in March. The week, benchmark indices managed to form a new four-month high despite rising COVID-19 infections and global growth worries ahead.

Global liquidity following stimulus packages from central banks worldwide, progress in the development of a vaccine along with record retail participation has kept the party going for the bulls. Experts feel that the market is also discounting a full economic recovery by FY22 given the June quarter earnings season which was supposed to be washout one but a majority of leaders from several sectors reported a good set of earnings.

BSE Sensex and Nifty50 have rallied close to 50 percent from March 23, and the same pattern was also seen in Midcap and Smallcap indices. Globally, too, equity markets are either near 52-week high or are close to an all-time high.


"Normally markets tend to discount the earnings/growth six to twelve months in advance. We believe that current rally where Nifty has almost gained 50 percent from the March low is on the back of both - expectation of earnings and easy monitory policies by the Central bank of across the globe," Devarsh Vakil, Deputy Head of Research at HDFC Securities told Moneycontrol.

"Though for FY21 consensus earnings growth expectation is muted, for FY22, market is expecting humungous 40 percent growth in earnings," he said.

All sectoral indices also reported hefty double-digit gains in the last four months, but these 45 stocks from BSE 500 index turned multibaggers in the short span of time.

Hathway Cable and Datacom, Intellect Design Arena, Dishman Carbogen Amcis, Dhanuka Agritech, Jubilant Life Sciences, Aurobindo Pharma, Muthoot Finance, Infibeam Avenues, Bharat Dynamics, Granules India, ICICI Securities, Dixon Technologies, Reliance Industries, Manappuram Finance, Glenmark Pharma, Alembic Pharmaceuticals, Edelweiss Financial Services, Escorts, Mahindra and Mahindra, Birlasoft, Bandhan Bank etc rallied 100-340 percent in just four months.

In the last four months, the advance-decline ratio of indices has improved significantly. In BSE 500, 94 percent stocks are trading above their March 23's price.

Foreign institutional investors (FIIs) remained net sellers in Indian shares in 2020 so far due to heavy selling in March, but they have been buyers since April. Even in the last five consecutive sessions, they net bought more than Rs 8,000 crore worth of equities.

On the contrary, domestic institutional investors including mutual funds and insurance companies are net buyers of equities worth Rs 85,000 crore in 2020 so far, though DIIs turned net sellers in July so far which could be due to profit-booking and redemption pressure but that seems to be temporary.

"The increased volatility in the market and continuing concerns around the spread of Coronavirus outbreak have led to investors taking a more conservative view on equity investments in the current context. However, the longer-term trend of a shift away from physical investments to financial investments will continue. Once the market stabilises and/ or there is clarity on containment of coronavirus, we expect equity investments through MFs to improve," Harsha Upadhyaya, President & CIO – Equity at Kotak Mahindra Asset Management Company said.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Jul 25, 2020 02:03 pm