Thanks to the transfusion by FPIs, the Indian stock market over the past three months has recovered from the March bloodbath.
The fight back was led by foreign portfolio investors, who were flush with money thanks to the generous stimulus package rolled out by global central banks.
The Sensex has rallied about 35 per cent since the low recorded on March 23, while the BSE Mid-cap and BSE Smallcap indices have gained about 37 per cent and 42 per cent, respectively.
The recovery was broad-based. About 92 per cent of the almost 2,200 frequently traded stocks on the BSE have rallied from their March lows.
Nearly 8 out of 10 stocks have recovered by more than or equal to 20 per cent. Not just that, almost 15 per cent of the stocks have doubled their price in this period.
Stock specific
Among the BSE 500 companies, Vodafone Idea was the top gainer with an absolute return of 230 per cent in the last three months.
The share price of the company surged as the sentiment towards telecom sector improved due to the resilience of the sector during the lockdown and the slew of stake sales in Jio platforms. Rumours of similar investments in Vodafone Idea lifted the stock price.
Adani Green, a renewable energy company, was another top performer, which hit record highs after the firm bagged, reportedly, the world's largest solar tender.
Pharma companies — Aurobindo Pharma and Glenmark — have been in the limelight over the last there months.
While the former rallied on obtaining regulatory clearances from the US, the latter surged after the company launched an antiviral drug for the treatment of mild to moderate Covid-19 cases in India.
Pharma tops
The pharma sector has been the flavour of the season due to higher visibility in earnings growth. The average return of pharma companies in the BSE 500 was almost 60 per cent in the last three months.
Companies in auto and auto ancillary too posted a decent recovery after being beaten down sharply during the correction. M&M and Escorts, which make farm-related motor vehicles, have seen better recovery of up to 70-85 per cent. Easing of lockdown restrictions across the globe and signs of recovery brought other cyclical stocks also onto investors’ radar. Stocks of most metal, mining, construction, cement, capital goods and consumer durable companies recovered up to about 75 per cent from their lows in March.
Meanwhile, stocks in the banking and financial services sector witnessed mixed recovery. Share prices of Muthoot Finance and Manappuram Finance, which provide loans against gold, almost doubled in the last three months. Other banking stocks, both private as well as public have seen a modest recovery.
Most IT and FMCG stocks that hadn’t corrected much in March are up by about 30-60 per cent from March levels. The stocks of aviation companies, SpiceJet and IndiGo, which lingered around the March lows for a long time, have seen an uptick by about 50 per cent and 20 per cent, respectively, once the flight services resumed. The laggards in the recent recovery were companies in the hospitality, logistics and multiplex sectors.
The worst performers include names such as Shriram City Union, Chola Financial and Spandana Sphoorty, which were hammered on concerns over increasing NPAs as the pandemic impacted the repayment capacity of borrowers. Stocks of PVR and Inox Leisure — multiplex operators — fell as they shut the theatres during the lockdown; there is no sign of normalcy returning any time soon.