First half of 2017 over: 100 stocks which more than doubled wealth rose up to 700%
It has been an eventful first half as the government was able to push through key reforms related to real estate, banks, and the most crucial goods & services tax (GST) which will come into effect from July 1.
The S&P BSE Sensex rallied from 26,626.46 recorded on 20 December 2016 to 30857.52 registered on June 29, 2017, which translates into an upside of over 16 percent.
“In the last 6 months, there has been an improvement in investor sentiments led by 3 major things – 1) Most of the high-frequency macro indicators saw an improvement thereby reaffirming the fact that the Indian economy is on an upward trend, 2) Announcements related to GST, the biggest tax reform that the country has seen, 3) Benefits of reforms announced till now percolating to ground level activity resulting in an improved sentiment of the companies,” Nitasha Shankar, Sr. VP and Head of Research, Yes Securities told Moneycontrol.
“As a result, the run-up is based on expectations of improvement in fundamentals. Our recommendation is to identify stocks with quality fundamentals,” she said.
Other prominent stocks which gained include names like Sharda Motor which rose 168 percent, followed by Yuken India (up 310%), Venky’s India (up 234%), Avanti Feeds (up 181%), Motilal Oswal (up 121%), V-Mart Retail (up 143%), and Transpek Industry (up 118%).
Well, it was not just gainers on D-Street which requires investors’ attention as nearly 1000 stocks on the BSE gave negative returns in the same period.
Foreign portfolio investors (FPIs) pumped in more than Rs 50,000 crore so far in Indian equity markets compared to Rs 14,000 crore poured in by domestic institutional investors (DIIs), according to SEBI data.
The stocks which rallied the most are largely from the small and midcap theme. The broader market did immensely well so far in the year 2017 and has been a clear outperformer compared to Nifty50 in the last five years as well.
“The stocks which have given exceptional returns are basically from a specific index and largely represent small and midcap space. Stocks which are in bluechip are already seeing stretched valuations,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.
“This is, in general, unlocking the value in small and midcap space and unlocking their potential which is reflected in share price. One can certainly add defensive stocks in the portfolio that come from Healthcare, Pharmaceutical, and FMCG,” he said.
What should investors do?
Now that you might be sitting on big gains if you invested in the stock market back in December, the next basic question is what one should do with stocks which have already run up quite a lot.
Analysts suggest investors' to stay with winners and book partial profits and analyse the fundamentals of the stock which they chose to remain invested in.
“Wealth is created in the stock market by "riding the winners and getting off the laggards." Therefore, profit booking in stocks that have doubled may not be a good idea,” Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.
“Investors have to distinguish between stocks with potential and those which have gone up without fundamentals. If some stocks which have gone up do not have strong fundamentals, profit booking may be resorted to. Otherwise, stay invested,” he said.
Shankar of Yes Securities advises investors to buy quality stocks and remain invested in the same. If investors do not wish to get into the hassle of timing their purchases based on market movements, then they could look at systematic investments on a periodic basis.
Happy Investing
Source: Moneycontrol.com
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