- by Sayantan Das
- 03rd Sep 2020
21 Stocks brought 37-67% Returns in August
August also saw the market continue the winning streak for the third consecutive month as FII money flowed into the market. The sentiment was boosted by the hope of economic recovery and strong earnings in FY22 and also the increased COVID-19 recovery rate.
The reports of India-China border tensions led to gains being capped due to sell-off on August’s last day. Despite this, the BSE Sensex climbed 2.72%. Monthly gains, though, were lower than July and June.
The leading sectors involved auto (up 7%), banks (9.65%), Capital Goods (7.9%) and Metal (up 12.88%). Slow progress was seen in FMCG & IT.
After the underperformance of around 2 and a half years, the broader markets smartly outperformed benchmarks with the midcap and smallcaps coming back in focus. A jump of 6.56% and 10% was recorded in the BSE Midcap and Smallcap indices, besides the 5.4/5.18% in July and 10.23/13.66% in June.
Out of the BSE500 index, almost 400 stocks close in the green. 200 of these posted returns in double-digits.
In fact, 37-67% returns in 1 month were shown by the top 21 stocks. VA Tech Wabag, Adani Enterprises, Affle India, Emami, Future Retail, Zee Entertainment, Shriram City Union Finance, CreditAccess Grameen, Ashok Leyland, Welspun India, PNB Housing Finance, Strides Pharma Science and GMM Pfaudler were included in the top 21 stocks.
Omaxe, Suzlon Energy, Container Corporation of India, Mangalore Refinery and Petrochemicals, Bandhan Bank, JK Lakshmi Cement, Dishman Carbogen Amcis, AU Small Finance Bank, Muthoot Finance, Hathway Cable stocks fell 10-15% in this month. Among BSE500, 100 stocks were losers inclusive of the ones mentioned above.
August also saw the inflow of the FII money- Rs 47,079.65 crore in equity. FII inflow was boosted by the pumping of money by the central bank into the economy, lowering of interest rates and rising confidence of vaccine development.
The consistent FII inflow is expected to push the market to continue to trade higher. However, in case of reversal of the flow, there could be correction because of valuations being expensive.
Prasanna Pathak, Head of Equity at Taurus Mutual Fund said that the recent run-up, expensive valuations, poor macros and other risks make the risk-reward look unfavorable at this time. The hopes are being pinned at speedy vaccine-approval, fiscal stimulus on the domestic front, rural/agri demand, pent-up demand and quick normalization of earnings. In the short term, however, the markets depend on liquidity and flows.