Three out of four BSE-500 stocks plunge in red as Sensex hits record

As Sensex hit another all-time high on Tuesday at 36902.06, three out of four BSE-500 stocks stayed at the other end of the spectrum, bleeding.

While 130 stocks have swung into the positive territory in 2018 (year to date), the remaining 370 have left investors in the lurch with a negative growth during the seven-month period since January 1.

Of these stocks, eight of them – including the former darlings of the market, Bajaj Auto, Hero Motocorp and Hindustan Zinc – hit a 52-week low on Tuesday.

Clearly, the soaring indices are being driven by a few stocks as several investors, especially retail investors, continue to count big losses from their equity investments.

"We are in a very different kind of scenario. In the last seven months, Nifty has touched the 11000 mark and then saw some correction and again rebounded. Despite rising crude price, rupee falling all-time low, 10-12 composites have contributed around 60-70% to both the equity indices. Companies like HDFC, Asian Paints, Reliance Industries and Bajaj Finserv are a few of them. The earnings growth is also not as expected. The Lok Sabha elections next year and some state elections this year are another factor for the downtrend. The heavyweight stocks are basically holding Nifty," Chandan Taparia, assistant vice-president, equity derivatives and technical at Motilal Oswal Securities, said.

During the year so far, Sensex has reported a growth of 8.13% to Tuesday's close of 36825.10. BSE-500, however, reported 0.06% drop year-to-date to 14994.47 on Tuesday.

"The broader market was an outperformer in 2017 and the mid-cap stocks showed a strong momentum. Last year, the 50-share gauge rose only 28% year on year, while the mid-cap and small-cap stocks surged 40-80% during the entire year. So a correction is happening in the broader market. There is no more liquidity," Taparia said.

Among the stocks that have seen a spectacular fall are Kwality (89%), Vakrangee (88%), Reliance Naval (75%), Manpasand Beverages (74%), HCC (70%), Jet Airways (61%), RCom (66%), Punjab National Bank (54%), BEML (51%), Balrampur Chini (50%) and Bank of India (48%).

During the seven-month period, top performers among BSE-500 include Indiabulls Ventures (103%), NIIT (87%), Firstsource (83%), HEG (81%), KPIT (68%), Jubilant Foodworks (68%) and L&T Infotech (64%).

"The mid-cap and small-cap stocks have run up too much this year. Rising crude and commodity prices and falling price of the raw materials have been a concern for these stocks. It was expected that the goods and services tax implementation will be beneficial for the broader market. But the large-cap stocks benefited more," said A K Prabhakar, head of research, IDBI Capital.

Taparia said rising crude prices, rupee volatility, trade war and other global factors are enabling the domestic investors to shift to a safer zone. "So they are investing more in large-cap stocks than mid-caps at present."