Auto companies are now grappling with a slowdown in sales, triggered by pent up demand due to the COVID-led lockdown easing a bit and supply-side issues for raw material.
Analysts, however, suggest investors remain selective on realty stocks and buy only where there is revenue visibility and a credible promoter backing.
At the 45th Annual General Meeting of Reliance Industries (RIL) in August, chairman and managing director (CMD) Mukesh Ambani described the company as an "unputdownable book" with never-ending chapters of success. "Reliance grew from strength to strength because we internalised the founder's mindset of purpose, philosophy and passion," he said. Wednesday marked the 90th birth anniversary of RIL founder Dhirubhai Ambani.
BSE-listed companies' market capitalisation reached Rs 197.7 trillion on January 21, against India's nominal GDP of Rs 190 trillion during 12 months ended December 2020.
Though most experts remain bullish on the banking space, they suggest investors buy only those banks whose NPAs are at a manageable level of 3% to 4% and there is credit growth or earnings visibility.
BJP loss could trigger a correction
Automobile company Tata Motors, metals and mining major Vedanta, oil marketing firm Bharat Petroleum Corporation (BPCL), private sector IndusInd Bank, and two-wheeler major Bajaj Auto have witnessed their market cap slip below the Rs 1-trillion mark this year.
HDFC and HDFC Bank's merger - touted as India's biggest-ever corporate merger - pumped up shares of the two entities on the bourses. Shares of Housing Finance Development Corporation (HDFC) skyrocketed 9 per cent while those of HDFC Bank zoomed 10 per cent. In comparison, the benchmark S&P BSESensex and the Nifty50 indices settled 2.2 per cent higher on Monday.
Analysts attribute the surge to a host of factors, particularly the interest shown by the retail investors in these two market segments.
The share of listed public sector undertakings (PSUs) in the overall market capitalisation has hit a three-year high of 11.4 per cent. This comes on the back of the sharp outperformance of the PSU pack over the past two years. In 2021 and 2022, the BSE PSU index gained 41 per cent and 23 per cent, respectively. Market participants said a combination of factors like value buying and bullishness, particularly in public sector banks (PSBs), were the reason for the improved prospects.
While RCom owes Indian banks close to Rs 45,000 crore, Ambani has lost close to $408 million of personal wealth year-to-date until Tuesday.
Their share in overall market capitalisation of BSE stocks has risen to a four-year high
Gold, which was hovering around $1,321 an ounce in January 2019, has already breached $1,600 per ounce in the past few sessions to a seven-year high.
Low home loan rates by banks could put large players in an advantageous position over smaller non-bank players, believe analysts.
India's top IT companies have shown a hiatus between their performance on the bourses in the pandemic period and earnings growth. The combined market cap of the top five IT companies - Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra - is up 87 per cent since the end of March 2020. In comparison, the benchmark BSE Sensex is up 68 per cent during the period. So the industry beat the broader market by a big margin in the last one year.
Shares of Motilal Oswal Financial Services, Edelweiss Financial Services and IIFL Holdings have all doubled in the past one year against the Sensex's 23 per cent gain.
The government is expected to dole out some populist policies, especially for the rural / farm sector while presenting the interim budget, given that the country is heading towards general elections over the next few months.
In the past two months alone, four companies have garnered a cumulative Rs 22,400 crore via this route.
A weak economy coupled with rising Covid-19 cases and inflation that is above RBI's comfort zone, geopolitical developments, and upcoming India Inc's second quarter results for FY21 could impact sentiment, analysts say.
Emerging markets such as India have always run higher inflation rates than developed economies such as the US and countries of Western Europe. But for the first time in the past 30 years, the US reported a higher consumer price inflation (CPI) rate than India in five consecutive months. The US reported a CPI rate of 7.5 per cent in January 2022 against 6.01 per cent in India and analysts expect the trend to continue for at least a few months more
Since last month, the realty (down 23%), auto (down 16%) and finance (down 14%) indices have underperformed the market by falling over 13%, as against 8% decline in the benchmark indices
After Maharashtra, analysts expect more states like Karnataka and Haryana to slash stamp duty rates. However, analysts, do caution that it's still a long road to recovery for the realty sector.
In three of the past four years, 10-year returns have been 10 per cent or lower, making equity unattractive, compared to other asset classes.
The Karnataka election is being seen as the semi-final to the 2019 general elections and appears to be heading towards a close fight
So far in September, the S&P BSE Small-cap index has gained nearly 3 per cent as compared to a modest 0.2 per cent dip in the S&P BSE Sensex.
Most analysts as well as company executives say the rally in commodity prices is ill-timed coming just when firms were recovering from disruptions such as demonetisation & introduction of GST
Puneet Wadhwa and Debashish Pachal locate real estate stocks to watch out for.
There will be pressure on the fiscal situation, especially at a time when the monsoon can also disappoint. More populist expenditure is on cards if the mandate is a hung Parliament or a coalition government.
The liquidity crisis at Dewan Housing Finance Corporation Limited (DHFL) has dented the fortunes of ace investor Rakesh Jhunjhunwala, who increased his stake in the troubled company in the March 2019 quarter (Q4FY19).
The Indian rupee is down nearly 2 per cent against the US dollar since the beginning of January 2019. Experts attribute the Indian rupee's relatively poor performance to a sharper-than-expected fall in economic growth in India.
Analysts attribute this fall to the recent moderation in energy (mainly crude oil) and commodity prices, lowering of input costs for companies in sectors such as FMCG, consumer durables, and automobiles, reports Krishna Kant.
Experts point to the higher contribution of rural from the north for the growth reported by the region, a point endorsed by companies who've been pushing their presence aggressively there.
While Mcleod Russel, ADF Foods, Indiabulls Real Estate, DCM Shriram and BSE have announced buyback through open market route, the remaining 23 companies plan to buy back their shares via tender offers
Not surprisingly, equity investors are bidding-up stock prices across sectors and the broader market is now more valuable than pre-Covid levels.
With markets expected to remain volatile, promoters and lenders exposed to the industrials and materials space can face brunt of the price erosion of the pledged shares.
Analysts attribute this outperformance to the government's proactive economic reform measures
Direct investors should stagger their investments over 1-2 months.
India Inc's cash pile was up 13.8 per cent last fiscal year, thanks to a combination of higher profits in sectors such as IT and fund raising by top companies such a Reliance Industries, Bharti Airtel and Tata Motors, among others.
The underperformance comes amid liquidity concerns in the non-banking finance companies space and Essel Group default news.
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