Check out the leaders and laggards behind India's jaw-dropping market performance

November 24, 2022 made it to the record books as the day when Sensex reached 62,412 and in the process created a new all-time high for itself. It took over 13 months for the Sensex to breach the previous record high of 62,245 it achieved on October 19, 2021.

On the other hand, it took the Sensex just over five months to reverse all its losses it incurred from its earlier peak and touched the yearly low of 50,921 on June 17, 2022.

Rising inflation, aggressive interest rate hikes, recessionary fears and ensuing geo-political tensions created severe headwinds for financial markets the world over. Increasing yields and dollar index forced Foreign Portfolio Investors (FPIs) to undertake a hasty retreat from the Indian markets, which resulted in the lows created in June 2022. However, the domestic institutions provided strong support, without which the rout in the Indian benchmarks could have been worse.

Looking at the performance of the BSE Sensex constituents between the previous year’s high and this year’s new high, though the Sensex has remained more or less flat, there are around 12 stocks (comprising 36 percent of Index weight) which have still managed to generate positive returns for the investors while others have declined from the prices they were trading at when the Sensex had created its previous all-time high last year.

Leaders

Leading the pack of stocks that have gained between the two highs, is the stock of auto major Mahindra & Mahindra Ltd. The stock currently trades at Rs 1,254 and has appreciated by 37.7 percent from last year. The company had declared robust results for the quarter ended September 2022, when it had achieved an on year growth of 46 percent in its profit after tax while its revenues grew ~57 percent.

Cigarette and FMCG major ITC Ltd has delivered returns of ~30 percent from the previous peak of Sensex and is currently trading at Rs 340 per share. The company witnessed healthy growth across its business segments led by cigarette, FMCG and hotels.

India’s second largest private sector lender, ICICI Bank, came in at third position among the heroes as it appreciated by 26 percent during the said period. Strong growth in credit offtake, increase in net interest income, lower provisions and healthy balance sheet have made this banking stock a favourite among investors.

Growth in average revenue per user and strong surge in data traffic enabled Bharti Airtel to deliver strong performance during the September quarter as it recorded a year-on-year growth of 89 percent in its consolidated net profit. Its consolidated revenue grew 22 percent on year.

Other contributors to the performers were Sun Pharmaceuticals, State Bank of India, Maruti Suzuki, Larsen & Toubro, NTPC, Power Grid Corporation of India, Axis Bank, Nestle India and Titan Company Ltd. Their stock prices have appreciated between one to 24 percent each.

Laggards

After a strong run up till last year, stocks of IT companies lost investors' favour as slowing global economy induced fears that the large corporations would cut down on discretionary spending, which would result in a slowdown in deal wins for Indian IT majors. Consequently, IT stocks were the biggest losers between the previous high of Sensex and today’s high.

The stock of Wipro was the worst hit as it depreciated by 44 percent during the last one year. The performance of the company during the September quarter was below street’s expectations as its profit dropped by 9 percent on year.

Another IT major, Tech Mahindra witnessed a 27.7 percent decline in its stock price and currently trades at Rs 1,069.15 as compared to its closing price of Rs 1,478.3 on October 19, 2021. The company reported a muted revenue growth because of which its profit after tax dipped by 8.5 percent on year.

The meltdown in global commodity prices amidst slowing demand and imposition of export duty on steel, battered the steel/metal stocks in past two quarters. In addition, the surge in input costs impacted the margins as a result of which the stock of steel major, Tata Steel witnessed a 25.3 percent decline in its stock price. Its consolidated profit plummeted 87 percent on year while the revenues were flat during the September ending quarter.

Other laggards of the group were Bajaj twins of Bajaj Finance Ltd and Bajaj Finserv Ltd which witnessed a decline of 13.9 and 12.5 percent in their prices respectively.

The prices of Dr Reddy’s Laboratories, Infosys Ltd, HCL Technologies, Tata Consultancy Services, UltraTech Cement, Reliance Industries, HDFC Ltd, Hindustan Unilever, Asian Paints, IndusInd Bank, Kotak Mahindra Bank and HDFC Bank slipped between 2.65 and 9.4 percent each.

Going forward, experts expect the positive momentum in Indian markets to continue, buoyed by positive global cues, fall in crude oil prices to 10-month low and 9th consecutive weekly decline in India VIX to a 52-week low.