The Bombay Stock Exchange’s (BSE) benchmark equity index, Sensex , that reached its lifetime peak in the second week of January, has lost some 18.4% this year after a meltdown in most global markets. Despite this, the index is still trading at least 20% higher than the levels it plunged to in August 2007 when the subprime crisis hit global markets.
However, a Mint analysis of BSE 500, the index of the 500 highest capitalized companies on BSE, indicates that one out of every three stocks in this basket is still trading below its price in August 2007. Thus, while the Sensex is trading at 16,542, well above the 13,779.88 it touched on 17 August 2007, all stocks have not moved in sync with the index.
The National Stock Exchange’s (NSE) broader 50-stock Nifty index had also touched a low of 4,002.20 on 17 August and is now up 23% from those levels; it closed Wednesday at 4,921.40.
On a broader canvas, at least two out of every five stocks (or 42.6% of the 2,587 listed companies) on BSE are trading below the lows they hit in August.
According to analysts, this clearly indicates the weakness in the market as so many stocks have failed to catch up with the gains made by Sensex since August last year, despite the index’s recent fall.
Among the 160 stocks in BSE 500 that are trading below the August 2007 prices, only three are part of the Sensex — Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd, Indian IT’s power trio. Not surprisingly, 50-odd stocks or almost one-third of these 160 laggards fall under the telecom, media, technology (TMT) umbrella, including 33 technology stocks.
Apart from the big three, other prominent technology stocks that have lost include HCL Technologies Ltd, i-flex Solutions Ltd, Tech Mahindra Ltd, MindTree Consulting Ltd, Sasken Communications Technology Ltd, NIIT Technologies Ltd, Hexaware Technologies Ltd, Moser Baer (India) Ltd, Mphasis Ltd, 3i Infotech Ltd and Financial Technologies Ltd.
Bangalore-based Sasken and Mumbai-based NIIT, trading 61.7% and 56% lower, respectively, than they did in August, are the worst performers among these 160 stocks .
Among the 12 media stocks in this group, Deccan Chronicle Holdings Ltd and direct-to-home business Dish TV India Ltd are the worst hit. These stocks are down more than 25% from their mid-August 2007 levels.
Three telecom stocks—Spice Communications Ltd, Mahanagar Telecom Nigam Ltd and Idea Cellular Ltd—also fall under this group. Spice has lost more than 31%.
However, on the other side of the coin, BSE 500 stocks such as REI Agro Ltd, Essar Shipping Ltd and Essar Oil Ltd witnessed major gains during this period. While REI Agro added 521.23% to Rs1,460.50, the two Essar firms gained 445% and 374%, respectively.
Among the 12 sectoral indices of BSE, the IT and Tech, which represent software and technology stocks, were the only indices currently at a lower level than their value on 17 August 2007.
The BSE Metal index, on the other hand, has beaten the Sensex with around 65% gains since August 2007. The oil stock basket of BSE also counts among the sectors that have outperformed Sensex with more than 42% gains during this period.