Searching for supernova-like returns? Look beyond top 500 stocks
, ETMarkets.com|
Updated: Dec 15, 2017, 11.19 AM IST
NEW DELHI: Did you know that at Rs 146 lakh crore, BSE's market capitalisation has jumped over 38 per cent from Rs 106 lakh crore at the end of 2016?
But the BSE500 index stocks have seen its market value rising only by 31 per cent to Rs 129 lakh crore from Rs 98.5 lakh crore.
The index accounted for nearly 93 per cent of the BSE's total m-cap at the end of 2016. This share has fallen to 88 per cent. There's a life beyond top 500 stocks.
A total of 440 BSE-listed stocks have returned over 100 per cent in 2017. We call them 'Supernovas'.
Of this, only 60-odd stocks are from the BSE500 index. Among the rest, while a few are a part of BSE Smallcap index, many are not a part of any index.
Everyone knows a spectacular 1,100 per cent surge that BSE500 constituent Indiabulls Ventures witnessed this calendar. But there remained two non-BSE 500 stocks, HEG (a manufacturer and exporter of graphite electrodes) and Soril Holdings (formally Indiabulls Wholesale Services), which have zoomed a similar percentage points this year. A stock called California Software is 831 per cent this year.
Weizmann Forex, Sanwaria Consumer, Goa Carbon, Bhansali Engineering Polymers among other stocks that have returned between 500 per cent and 770 per cent. (See table)
But there is a caveat. Gains in this uncharted universe could be made only via the principles of value investing. The reward on such stocks is more, so are the risks involved.
"One should look at companies with a three-year profit CAGR growth in excess of 15 per cent and low debt levels. Prefer companies that have scalable business that may lead to higher growth in coming years," Vikas Jain Senior Research Analyst Reliance Securities said.
While sectors such as IT and pharma did not do well, big IPO listings too played a role in the percentage of BSE 500 m-cap to total BSE m-cap dropping below 90 per cent level during the year.
"Strong IPO listings such as HDFC Life, which are yet not a part of BSE500 index, have added to the overall BSE m-cap. But there are also a lot of stocks from pharma and IT sector which have underperformed in the current year, leading to underperformance of BSE500 against the overall market," Jain said.
But the BSE500 index stocks have seen its market value rising only by 31 per cent to Rs 129 lakh crore from Rs 98.5 lakh crore.
The index accounted for nearly 93 per cent of the BSE's total m-cap at the end of 2016. This share has fallen to 88 per cent. There's a life beyond top 500 stocks.
A total of 440 BSE-listed stocks have returned over 100 per cent in 2017. We call them 'Supernovas'.
Of this, only 60-odd stocks are from the BSE500 index. Among the rest, while a few are a part of BSE Smallcap index, many are not a part of any index.
Everyone knows a spectacular 1,100 per cent surge that BSE500 constituent Indiabulls Ventures witnessed this calendar. But there remained two non-BSE 500 stocks, HEG (a manufacturer and exporter of graphite electrodes) and Soril Holdings (formally Indiabulls Wholesale Services), which have zoomed a similar percentage points this year. A stock called California Software is 831 per cent this year.
Weizmann Forex, Sanwaria Consumer, Goa Carbon, Bhansali Engineering Polymers among other stocks that have returned between 500 per cent and 770 per cent. (See table)
But there is a caveat. Gains in this uncharted universe could be made only via the principles of value investing. The reward on such stocks is more, so are the risks involved.
"One should look at companies with a three-year profit CAGR growth in excess of 15 per cent and low debt levels. Prefer companies that have scalable business that may lead to higher growth in coming years," Vikas Jain Senior Research Analyst Reliance Securities said.
While sectors such as IT and pharma did not do well, big IPO listings too played a role in the percentage of BSE 500 m-cap to total BSE m-cap dropping below 90 per cent level during the year.
"Strong IPO listings such as HDFC Life, which are yet not a part of BSE500 index, have added to the overall BSE m-cap. But there are also a lot of stocks from pharma and IT sector which have underperformed in the current year, leading to underperformance of BSE500 against the overall market," Jain said.
