Nearly 60% of Nifty 50 stocks are down this month; 8 stocks dipped more than 10%

The Nifty 50, representing the top 50 blue-chip companies across various sectors, has witnessed a significant downturn over the last six trading sessions, primarily driven by substantial selling in heavyweight sectors, notably banking. Major banks, following their weak Q3 performance, are witnessing a sharp drop in their share price.

Foreign portfolio investors (FPIs), on the other hand, have been actively selling, withdrawing over ₹28,000 crore from Indian markets in the last five sessions. The catalysts for this selling spree include the surge in US bond yields, concerns over geopolitical tensions in the Red Sea, and the prevailing trend of weak corporate earnings in Q3 so far, prompting FPIs to book profits.

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Against this backdrop, the Nifty 50 has seen a 2.27% erosion in value so far this month. From its all-time high of ₹22,115 points, the index has witnessed a 4% decline. Notably, the index experienced a drop exceeding 1% on two occasions in January. In the most recent trading session (Tuesday), it slipped below the 21,200 level in intraday trade, hitting the calendar year 2024 low of 21,192 points.

It is worth noting that the Nifty 50 witnessed a remarkable surge of 7.94% in December 2023, marking its most significant December gain since 2003. Before this, in November, the index recorded a gain of 5.52%. This robust rally propelled the index to conclude the calendar year 2023 with an overall gain of 20%, positioning Indian stocks as relatively more expensive on a global scale.

Also Read: Stretched valuations could weigh on Indian stock market returns in 2024, cautions CLSA

In the second week of the current month, foreign brokerage firm CLSA stated that India has now become the most expensive large market in the world, which may weigh on returns this year (2024).

60% of Stocks Register Downturn

Currently, 28 out of the 50 stocks in the Nifty 50, accounting for 56%, have yielded negative returns in the current month so far. Among these eight stocks lost more than 10% of their value.

The index experienced a downturn following the release of Q3 FY24 results by the heavyweight HDFC Bank on January 16. The bank's performance fell short of street estimates, particularly in deposit and liquidity metrics, leading to a 15% decline in its share price (as of Tuesday closing price). In the previous session, the market capitalisation of the bank dipped below the ₹11 lakh crore mark, settling at ₹10.83 lakh crore.

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Given HDFC Bank's substantial 14% weightage in the Nifty 50 and a significant 30% weightage in the Nifty Bank index, its weak performance has contributed to the broader market decline. Other major banking players, including SBI, Kotak Mahindra Bank, IndusInd Bank, and Axis Bank, are also down between 1 and 10% in the current month.

Eicher Motors, a leading player in the two-wheeler industry, stood as the second-worst performer in the Nifty 50, witnessing a nearly 13% drop so far in the current month. In a recent note, Investec downgraded the stock to 'Sell,' citing intense competition in the premium bike segment.

The brokerage said that the company may lose market share as rivals like Triumph and Harley increase their India dealerships to 100 and raise production to 10,000 units per month.

Hindalco was another worst performer this month, witnessing a 12% decline. Concurrently, the FMCG company Hindustan Unilever (HUL) also experienced a nearly 11% loss in its shares thus far in the ongoing month. During Tuesday's trading session, the stock took a 4% plunge, reaching an 18-month low, following the company's lacklustre performance in the December-ending quarter, attributed to sluggish demand.

On January 19, HUL reported a standalone net profit of ₹2,519 crore in Q3 FY24. This represented a meagre 0.55% increase from ₹2,505 crore in the same quarter of the previous financial year, falling below street estimates.

Other stocks, including LTIMindtree, Asian Paints, JSW Steel, HDFC Life, UPL, M&M, Divis Labs, Nestle, Ultratech Cement, Bajaj Finserv, Britannia, Maruti Suzuki, SBI Life Insurance, Bajaj Finance, NTPC, Dr Reddy Labs, Grasim, ITC, Wipro, and Coal India have all experienced decline ranging from 0.15% to 10% in January so far. 

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.