These stocks rallied up to 37% last week; should you buy?

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As many as 12% or 61 constituents of the BSE 500 index delivered double-digit returns to investors last week as market sentiments got a boost due to declining Covid-19 cases, robust Q4 earnings scorecard and favourable global cues.

With a gain of 37.18%, TCI Express emerged as the top gainer in the index. Shares of the company jumped to Rs 1,295 on May 21 from Rs 944 on May 14. HFCL (up 32.12% in last two weeks this stock has rallied over 58%), Adani Transmission (up 27.18%), JK Lakshmi Cement (up 21.72%), La Opala (up 20.59%) and Birla Corporation (up 20.11%) stood among the stocks that rallied over 20% on BSE 500.

The benchmark equity index BSE Sensex surged over 1,800 points, or 3.71%, to end the week abover the psychological 50,000-mark at 50,540. On the other hand, BSE 500 index surged 705 points or 3.55% to 20,567 while the BSE Midcap index gained 977 points, or 4.77%, to 21,485. The BSE Smallcap index climbed 929 points, or 4.19%, to 23,130. The BSE 500 (20,582), BSE Smallcap (23,219) & BSE Midcap (21,541) indices touched their record highs on May 21, 2021.

Top stocks

Adani Green Energy (up 19.51%), KEI Industries (up 19.30%), ICICI Securities (up 18.79%), Shilpa Medicare (up 18.70%), Shriram City Union (up 18.40%), India Cements (up 17.81%), TV Today Network (up 17.48%), Indiabulls Housing Finance (up 17.22%) and CSB Bank (up 17.04%) were among other majors gainers of the week.

The broad-based rally in the market took market capitalisation of all companies listed on BSE stood at all-time high of Rs 218.14 lakh crore or 3 trillion dollars. On a year to date basis for the calendar year 2021, the exchange has added over Rs 30 lakh crore. Whereas in the financial year 2021-22 investor wealth grew by almost Rs 14 lakh crore and in the month of May so far the market capitalisation jumped by Rs 11.11 lakh crore with the current week contributing Rs 7.53 lakh crore.

Expert views

“Indian market has started to outperform the development market which is expected to continue due to a fall in COVID cases. High cases was the primary reason for India to trade weak, now INR has started to appreciate. The entry of new vaccines in the market which will ease supply crunch and a steady decline in the new covid cases are factors boosting investor confidence in the market,” said Vinod Nair, Head of Research at Geojit Financial Services.

Outlook

Markets are likely to be volatile in the near term as traders will roll over positions in the F&O segment from the near month of May series to June series. Local and global macroeconomic data, earnings, Covid-19 updates and global cues are some of the factors which will guide the domestic stock market. Besides, the movement of the rupee against the dollar and crude oil prices, the movement in global stock markets will also dictate the trend on the bourses in the near term. Investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will also be monitored.

“The overall structure of the market remains positive from the long term perspective. However, daily deaths record continue to be high and worry the investors. Even the rising inflation worry continues to loom. So, global economic revival, the risk of pickup in inflation and development on the Covid-19 front domestically would decide the market direction going ahead,” said Siddhartha Khemka, Head – Retail Research of Motilal Oswal Financial Services.