The BSE S&P Sensex may have vaulted over the 20K peak, but did you know, two out of three stocks in the listed space are ruling at below their 2010 highs? For the markets, defensive sector stocks saved the day, fuelling the rally.
Pharma, FMCG, consumer durables and information technology form the defensive sector. Stocks from these sectors typically, stand their ground during times of market weakness.
More than a third of the 3,000 listed stocks currently rule at 60 per cent below their September, 2010 prices, when the Sensex had hit the 20,000 mark for the second time in the market’s history. Within the Sensex pack, 17 stocks rule below their 2010 peaks. Jindal Steel and Power, Bharat Heavy Electricals, Tata Steel, Sterlite Industries, Hindalco Industries, SBI and NTPC have all recorded losses between September 21, 2010 and now.
The rally was led by a handful of stocks -- Sun Pharma, Hindustan Unilever and ITC. While the prices of these stocks doubled, a few others from the defensive sector rose by 30-40 per cent. Page Industries (up 265 per cent), TTK Prestige (up 256 per cent), Kajaria Ceramics, Bata India, V-Guard Industries and Lupin were among the top gainers in the BSE 500 basket.
Institutions sell
A look at the shareholding pattern of the companies that have done badly during this period reveals that the price fall was triggered by institutional sell-off. Retail investors have burnt their fingers by being on the buy side. Take, for instance, Lanco Infratech. While FIIs had cut their stake in the company from 20 per cent to 3 per cent and domestic institutions also reduced their stake, retail investors increased their holding from 2 per cent in September 2010 to 13 per cent now.
Similar is the case with DB Realty, Bajaj Hindusthan and Tata Steel whose stock prices are down sharply.