The S&P BSE Sensex might have just lost 3 percent for the quarter ended March but nearly 400 stocks in the S&P BSE 500 index slipped up to 62 percent in the same period.
Implementation of Long-Term Capital Gains Tax (LTCG), along with banking woes weighed on sentiment and on the global front trade war fears, geopolitical tensions arising on the Middle Eastern front, fall in global liquidity, Fed rate hike as well as rising crude oil prices weighed on sentiment.
Apart from global headwinds, the aggressive political posturing by opposition parties, led by encouragement from their victory in UP by-polls also added to the worrying factors, suggest experts.
The broader market was the worst hit with the S&P BSE Smallcap index falling a little over 11 percent and the S&P BSE Midcap index saw a decline of a little over 10 percent in the same period.
The larger fall was in individual stocks such as JBF Industries (down 62 percent), followed by Vakrangee (down 47 percent), Kwality (down 46 percent), HCC (down 45 percent), PNB (down 44 percent), Unitech (down 42 percent), and Bank of India (down 39 percent).
“The equity market has been in a consolidation mode over the last couple of months, influenced by global as well as domestic cues. The Nifty has declined by about 4 percent in 2018 so far, broadly in-line with the emerging market pack amid lingering domestic and global uncertainty, we expect markets to remain range-bound in the near-term,” Sanjay Kumar, CIO, PNB MetLife told Moneycontrol.
“There are global headwinds in the form of monetary policy normalization by global central banks (particularly US Fed), increasing fears of global trade war and consequent risk-off sentiment, triggering potential foreign capital outflows,” he said.
However, not everything can be due to global factors. For example, JBF Industries has been in a downtrend since February when it reported its results for the quarter ended December.
For the first nine months (April-December) of the current financial year 2017-18 (FY18), it reported a net loss of Rs 43.7 crore as compared to net profit Rs 24.5 crore during the same period of FY17, said a report.
JBF Industries is engaged in the business of producing polyester-based products had posted net loss of Rs 163 million Q3FY18 against a net profit of Rs 35 million in previous year quarter.
Vakrangee on the other hand which plans to create India’s largest network of last-mile retail points-of-sale, to potentially enable every Indian to seamlessly benefit from financial inclusion has been under pressure so far in the year 2018 after a media report suggested back in February that the company was being probed by Sebi for possible price manipulation.
However, the management clarified in a written response said: “Vakrangee would like to highlight that we have not received any communication either from stock exchanges or SEBI.”
March Quarter Gainers:
It was not all bears which dominated D-Street. Nearly 100 stocks in the S&P BSE 500 index rose up to 39 percent compared to 3 percent fall seen in the S&P BSE Sensex in the same period.
Stocks which managed to beat the benchmark index include names like Venky’s, HEG, NIIT Technologies, Jubilant FoodWorks, Firstsource Solutions, V-Mart Retail, MindTree, Tech Mahindra, IDBI Bank etc. among others.
The good news which is supporting the markets is that the micros have turned positive with clear signs of healthy growth in corporate earnings in Q3 results.
“The market participants are eagerly awaiting Q4 and full year FY2018 results to further reaffirm the improving trend in earnings growth in India. The consensus earnings estimates are factoring a 20 percent plus annual growth rate in Sensex earnings over FY2018 to FY2020,” Sharekhan said in a note.
“Though the revision in earnings of some banks and other adjustment could lead to some downward revision in estimates going forward, the healthy growth in earnings would definitely support equity markets,” it said.