Holi to Holi: A year of multi-baggers, record highs, wild volatility and issue frenzy

It’s Holi today. And, the Indian market is set to celebrate the festival of colours in style with a gleaming 2 percent rise at the close of the eighth straight session on Thursday.

This was a rebound from a 16 percent slump from the record highs of October 19, 2021, as the market was scorched by the simmering Ukraine-Russia war that had set crude prices shooting past $100 a barrel and blazes of imminent rate hikes by most central banks.

 

The decline initiated talks that the Indian markets had skidded into a bear phase from the bull run that had started in 2020.

The markets, however, showed resilience with the BSE Sensex gaining around 5,000 points and the Nifty50 adding 1,400 points in the last eight sessions. March 15 was the only day in the middle when the markets had run into the red.

The robust rebound made investors richer by Rs 19 lakh crore. The markets also priced in the 25-bps hike in interest rates implemented by the US Fed on March 16. The possibility of a long-awaited truce to end the Ukraine war also aided the rally till the close of trading on March 17.The market rebound sets stage for a brighter Holi this time. Between the two successive Holis, the journey of the Indian stock market has been an extraordinary one, to say the least. The 30-pack BSE Sensex has generated healthy returns of 16 percent during this period, while the Nifty50 gained 17 percent.

The market had reacted sharply when the huge container vessel Evergreen went aground in the Suez Canal, choking the entire global supply chain, in March 2021. “The crisis taught us how weak the supply chain is and just by a short-term event the markets can be affected so much,” said Divam Sharma, Founder at Green Portfolio.

At the end of it, the markets realised that the impact wasn’t what everyone had feared it to be and the short-term fall of 2.7 percent got reversed.

From Evergreen, we moved to Evergrande or, as many termed it to be Lehman Brothers 2.0, when the Chinese real estate giant was expected to default on a whopping $300-billion debt. “The investors were immediately exiting the market to prepare for what was expected to be another crisis. Yet again the markets realised that the scope of influence of this Chinese firm was very limited and the markets once again moved out of the sentimental run,” Sharma said.

Back on the home turf, the growth in the Indian markets was all around as all the major sectoral indices on the BSE generated handsome returns for the investors.

The crude prices were already on an up move and the global sanctions on Russia, especially ban on Russian crude, stoked it further. Coal and gas prices also saw a surge in this rising demand for power with the increased production activity across economies after easing of lockdown restrictions. The coal and gas prices also shot up because of the the geopolitical crisis.

Both the BSE Power and BSE Utilities were the top gainers among the sectoral indices as they soared 59 percent each since last Holi. The cyclical recovery in metal prices aided the growth of stocks of metal companies as the BSE Metals sector generated 56 percent in the last one year.

Sectors such as consumer durables, small-cap, realty, technology, telecom and capital goods also put up a good run with each gaining 31–38 percent since last March. FMCG, auto and finance were the laggards with only single digit returns. The slow credit offtake from the private sector due to COVID pandemic impacted the BFSI sector.

FMCG companies faced margin pressures due to higher raw material costs as well and has a slight slowdown in rural demand while auto manufacturers were grappling with the shortage of semiconductors which impacted their production even though the demand for automobiles continued to be strong.

Moving to individual stocks, considering a threshold market cap of more than Rs 2,000 crore, there were 124 stocks that gave multi-bagger returns in the last one year. Stocks generating more than 100 percent returns in the past one-year period are being considered as multi-baggers.

Leading the multi-bagger pack is Polo Queen Industrial & Fintech Ltd. The company which trades in fast moving consumer goods (FMCG) and other products, saw its share price zoom from Re 1 to Rs 77 in the past one year, outperforming all other stocks to generate returns of 7,620 percent.

The second multi-bagger is Brightcom Group Ltd. Veteran market specialist and investor Shankar Sharma recently bought 1.25 percent stake in Hyderabad headquartered digital marketing solutions firm. The price of the company has surged 1,758 percent since last ‘holi’.

The other multi-bagger which delivered four digit returns was National Standard (India) Ltd. It gained 1,166 percent from Rs 566 a year ago to Rs 7,165 currently.

Lloyds Metals & Energy Ltd is the fourth multi-bagger with market cap more than Rs 2000 crore that generated four digit returns since last ‘holi’. The stock price has appreciated by 1,132 percent during the said period.

Six companies including Tata Teleservices, RattanIndia Enterprises and Jindal Worlwide gained between 500 – 925 percent while 27 companies delivered 200-500 percent returns during the past one year.

In the more than Rs 1,000 crore market cap category, 197 companies generated multi-bagger returns while there were 290 multi-baggers in the Rs 500 or more market capitalization.

Last one-year period also saw the launch of largest number of IPOs (initial public offer) in the Indian primary markets, including one of the biggest IPOs in the history, the IPO of One97 Communications Ltd (Paytm).

“Paytm IPO will be remembered for two reasons- firstly how it is the largest IPO in the country till date and secondly how overvalued IPOs fail and lose out on investor confidence”, said Sharma of Green Portfolio.

The IPO which was launched during the bull run when every IPO was getting oversubscribed, but due to its unjustifiable valuations Paytm couldn’t garner the support and fall flat with both the institutions and retails investors deserting it. The stock is currently languishing at 1/3rd its IPO price.

“This year is a clear example that markets do correct, there are several micro and macro factors that affect the market but in the long term markets only react to news and not noise”, added Sharma. One must not get moved by short-term volatility in the market and should always stick to the fundamentals.
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