New Delhi: Big names like the Ambanis, Tatas and Mittals do not necessarily mean big returns and small names come with much bigger risks — this could well be the big lesson the stock market taught investors in 2010.
As the year draws to a close, the overall impression given by the market through its benchmark indices, the Sensex and Nifty, seems to be good, as the two appreciated by about 15% and returns were much higher for many stocks.
At the same time, investors lost money on many of the big traditional names and returns were below average for stocks of many other companies -- irrespective of whether they belonged to big industrial groups.
Returns have been negative over the past one-year period for at least three Anil Ambani group firms — Reliance Communications, Reliance Infra and Reliance Capital — as well as Mukesh Ambani group heavyweight Reliance Industries and Tata group’s Tata Power.
At the same time, other big names such as Tulsi Tanti-led Suzlon, JP Associates, K P Singh-led DLF, Sesa Goa and Sterlite Industries of Anil Agarwal group, car major Maruti and Jindal Steel, besides PSU majors like NTPC, PowerGrid and Bhel, also saw negative returns for the year.
Things weren’t great either for names such as Anil Ambani group’s Reliance Power, Tata Group’s Tata Steel, Sunil Mittal-led Bharti Airtel and other giants like Cipla, Ranbaxy, Hindustan Unilever, as well as government-run ONGC and BPCL, where returns were below average.
This marks a significant departure from earlier years when big names were considered by investors as a guarantee for good returns.
“Auto, banking sectors performed well in 2010... and most of the posterboys’ firms are not present in these sectors... 2011 should be a great year for all these companies when we will see India’s growth getting stabilised,” Networth Stock Broking head of institutional business Prakash Diwan said.
Punters also burnt their fingers on a host of mid-cap and small-cap companies as a number of regulatory actions and reports, including those speculative in nature, against wrongdoings by many such companies hit their stock performance.
However, all was not bad for investors when it came to big names. Tata Group’s Tata Motors has so far been the best performer of 2010, registering the highest rise of 75% among the 50 stocks that make up the Nifty index.
At the same time, names like Bajaj Auto, Hindalco, Sun Pharma and TCS, which have been mostly considered as defensive stocks where returns are steady but not extraordinary, have also unexpectedly given returns of over 50%.
Investors also saw decent returns from stocks like M&M, Ambuja Cements, Siemens, Dr Reddy’s, Axis Bank, PNB, ITC, HDFC Bank, HDFC, ICICI Bank, Infosys, ACC and SBI.
Among the smaller companies, Cummins Industries, Bank of Baroda, Canara Bank, Asian Paints, Federal Bank, Lupin and Corporation Bank gave over 50% returns.
However, Punj Lloyd, HDIL, Indiabulls Real Estate, GMR Infra and Tech Mahindra were among those where returns were negative.
Among the big names, Reliance Infra and Reliance Cap lost over 20% each in their share prices, while the loss for RCOM was about 18%. However, the losses were less for Tata Power (about 2%) and RIL (0.6%).
For Reliance Power and Bharti Airtel, the gains were less than 5%. Reliance Industrial Infrastructure, a Mukesh Ambani group firm, also lost about 25% in value.
Tata group’s Tata Teleservices Maharashtra also bore the brunt of the pressure on the entire sector, with the scrip tumbling over 25%.
One of the best performers for the Anil Ambani group was Reliance Power, with returns at a modest 5%.
RPower has disappointed investors since its debut on the bourses in February, 2008, when it had listed at a price of Rs 547.8 a piece.
“Power is a long gestation story, which is why I can say that the stocks remained immune to the volatility in the stock markets,” CNI Research CMD Kishore P Ostwal said.
SMC Global’s Strategist & Equity Head Jagannadham Thunuguntla said that next year too may not be a blockbuster for the big-shots, which saw only selective buying at their counters all through 2010.