Meet October winners! Top 20 stocks in S&P BSE 500 which rose 30-70%

The month of October turned out to be a blockbuster month for equity markets as benchmark indices surged to record highs thanks to stable global cues, no major negative surprise from Q2 results, and sustained buying from domestic institutional investors.

The S&P BSE Sensex rose by 6.1 percent in the month of October to post its best monthly gains since March 2016. The Nifty rose by 5.59 percent in the same period.

The domestic institutional investors (DIIs) poured in over Rs 10,000 crore in Indian equity markets while foreign institutional investors (FIIs) took over Rs 7000 crore in the same period, according to provisional data.

The S&P BSE Sensex rose by just 6 percent but there was plenty of action in individual stocks. Stocks rallied up to 70 percent in the S&P BSE 500 index in just one month.

Stocks which stood out in the month of October include names like 8K Miles Software which rose by 77 percent, followed by Gujarat Narmada Valley which gained 72 percent, Rain Industries which has been on buying list of traders in the year 2017 rose 54 percent, and PNB shot up by 52 percent, according to Capitaline data.

Other stocks which rise between 30-50 percent include names like SAIL, Dilip Buildcon, MOIL, Inox Wind, Delta Corp, Syndicate Bank, Canara Bank, Avanti Feeds, Union Bank of India, Bank of India, Adani Transmission etc. among others.

You could call it Diwali cheer or expectations of bounce back in earnings growth or PSU bank recapitalisation fuelled bullish sentiment. A Strong rally in global markets also helped Indian markets to climb a wall of worries around mixed macro data.

Towards the close of the month, the government unveiled a Rs 2.1 lakh crore recapitalisation package for public sector lenders which will be injected over two years which pushed global investment banks to raise target price for the Nifty50.

Soon after the govt announced recapitalisation plan, Goldman Sachs raised the target price for Nifty from 10,900 in September 2018 to 11,600 by December 2018, which translates into an upside of 11.6 percent from current levels.

The Nifty50 rose nearly 6 percent so far in the month of October, led by gains in Bharti Airtel which rose 27 percent, followed by Reliance Industries which gained 20 percent, and SBI rose 20.4 percent in the same period.

Stable earnings helped the sentiment:

Equity markets are anticipating earnings growth to recover at a robust pace. So far, 21 Nifty companies (free float weight of 54.5 percent) have declared their Q2FY18 results, which have been largely been in line with expectation except for the corporate lenders.

Indian equities are rising on the comfort that the near-term growth outlook may be stabilising on the back of encouraging high-frequency data over the past two months.

“We believe, given the positive momentum in stocks, the favourable base effect due to demonetisation in Q3FY18 and robust domestic flows, equity markets could remain elevated in the short term,” ICICI Securities said in a report.

“While there is a spike in longer-term optimism due to the series of announcements made by the government to support growth, our proprietary measure of long-term optimism indicates that the market is assigning 55 percent of the current Nifty value to growth beyond FY19,” it said.