These BSE 500 stocks are riding a crest, do you own any?

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Benchmark indices continued to buckle under selling pressure but a few stocks managed to eke out gains. Volatility was high during the week due as GST collection came in at Rs 92,849 crore in June, breaking the 8-month streak of crossing Rs 1 lakh crore. Even the India Services PMI stood at 41.2 in June 2021, highlighting a further contraction in output. Besides Fitch Ratings, cut India’s growth forecast to 10% for the current fiscal, from 12.8% estimated earlier. That apart the spread of the Delta variant of coronavirus may hamper global economic recovery weighed on investor sentiment.

Despite these factors, the party continued in the broader market as almost 56% of stocks in the BSE 500 index managed to deliver positive returns to investors.

“The domestic market continued to be under the grip of bears following weak Asian peers as investor confidence was shattered due to the global spread of Delta virus variant. The equity market is turning risk-averse and side-lined. The IT sector also turned bearish as the initial earnings results did not meet the expectations of the market,” said Vinod Nair, Head of Research at Geojit Financial Services.

Gainers and laggards

With gains of 23.30%, Equitas Holdings emerged as the top gainer in the index. It was followed by Rain Industries (up 22.94%), HFCL (up 22.69%) and Motilal Oswal Financial Services (up 21.76%) were among the top gainers.

Whereas stocks specific news kept counters like Sobha (up 19.78%), Edelweiss Financial Services (up 16.58%), K.P.R. Mill (up 16.44%) and AU Small Finance Bank (up 15.13%) buzzing.

Force Motors, IRB Infrastructure Developers, Avanti Feeds, Mahindra Holidays & Resorts India, Brigade Enterprises, VRL Logistics, Dish TV India, Tasty Bite Eatables, Deepak Fertilisers & Petrochemicals Corporation, Sunteck Realty, Equitas Small Finance Bank, Just Dial, SIS, Lakshmi Machine Works, Jindal Stainless and Century Textiles & Industries also gained in the range of 10-14%.

Outlook

In the upcoming week, investors will continue to track Q1 earnings, macro data like Industrial Production and Manufacturing Production data for May, WPI inflation WPI inflation for June 2021. The trend in global stock markets, the movement of the rupee against the dollar and crude oil prices will dictate the trend on the bourses in the near term. Investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will be monitored.

Investors will also be looking at the $1.25 billion initial public offerings (IPO) of food delivery startup Zomato next week, which is set to open for subscription on July 14. The company has fixed a price band of Rs 72-76 per equity share. The offer will close on July 16.

“Equity markets have largely looked through the turbulent period has shown strong resilience, with indices trading near all-time highs – buoyed by best-in-decade earnings delivery in FY21 and the expectation of an even better FY22. The Mid & Small cap indices have sharply outperformed the Nifty and reset several benchmarks. The primary markets are also seeing a flurry of activity with several IPOs lined up. The market faces headwinds from the advent of a possible third Covid wave, persistent inflation readings prompting a potential rate increase, and volatility around the US Fed taper talk. Current valuations, while not expensive, are not lucrative from a risk-reward perspective. Consistent earnings delivery v/s expectations is critical for further outperformance,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.