At a time when the frontline benchmark index on the BSE, the S&P BSE Sensex, breached the 40,000 mark, nearly 275 stocks that comprise the BSE 500 index have given a negative return thus far in calendar year 2019 (CY19).
A ‘hope rally’ that the Narendra Modi – led National Democratic Alliance (NDA) would secure a second consecutive term continued post the outcome of the general election as well. The rally has pushed the S&P BSE Sensex 10.2 per cent higher on a year-to-date (YTD) basis. The 30-share index managed to breach the 40,000 mark during this period before profit booking set in.
Among the stocks that comprise the BSE 500, the worst performers thus far in CY19 have been stocks of Anil Dhirubhai Ambani Group (ADAG). Reliance Communications (RCom), Reliance Infrastructure, Reliance Power and Reliance Capital (RCap) have tanked 61 per cent to 89 per cent and have underperformed the S&P BSE Mid-cap and S&P BSE Small-cap indices as well that slipped 3.3 per cent and 1.1 per cent during this period, ACE Equity data shows.
Recently, Anil Ambani, the chairman of debt-ridden Reliance ADAG Group blamed “unwarranted rumour-mongering” for the sharp fall in shares of his group firms in recent weeks and said he was committed to meeting “all future debt servicing obligations in a timely manner”.
Ambani’s remarks came in the backdrop of the invocation of pledged shares by lenders, impairments taken for its power company, and a delay in results announcement for its infrastructure arm.
Given the developments, analysts say there are better investment opportunities in the market, especially in the mid-cap and the small-cap segments, which can create wealth for investors over a period of time.
“I think investors should look elsewhere for investment and not the ADAG pack. These stocks do not offer much value despite being hammered over the past few months,” advises A K Prabhakar, head of research at IDBI Capital.
Dewan Housing Finance Limited (DHFL) is another stock that is among the top 10 worst performers of CY19 among the BSE 500 pack. The stock in which ace investor Rakesh Jhunjhunwala and state insurer, Life Insurance Corporation of India (LIC), owned 3.19 per cent and 3.44 per cent stake at the end of March 2019 quarter has tanked nearly 63 per cent YTD (till June 12) given the negative news-flow over the past few months.
Apollo Hospitals, AU Small Fin Bank, Chalet Hotels, Edelweiss Financial, Gujarat Gas, Indraprastha Gas, Indian Hotels, Jindal Steel & Power, Jubiliant Foodworks, Just Dial, Oberoi Realty, Prestige Estates and Sobha Developers are the mid-cap stocks of Morgan Stanley where it maintains an overweight rating.
As per a recent report, among the mid-caps, analysts at Prabhudas Lilladher remain bullish on Ashok Leyland, Shriram Transport Finance, IDFC First Bank, L&T Technology Services, Jubilant FoodWorks, P.I. Industries and Crompton Greaves Consumer. Their top picks in the small-cap segment include Kalpataru Power Transmission, V.I.P. Industries and NOCIL.