The month of February has been a roller coaster ride for investors as Nifty moved in a 500-point range, however, for the month, the index is flat with a negative bias so far. Nifty50, which hit a high of 11,118 on February 7, made a bottom around 10,585 on February 19 before it started rising again.
In terms of stocks, 163 counters in the BSE 500 index hit a fresh 52-week low in February. Out of those, 119 stocks fell 10-60 percent this year so far, data from AceEquity showed.
The list includes prominent names like Reliance Power, Reliance Communications, Graphite India, Dena Bank, Rain Industries, Kaveri Seeds, IDBI Bank, IRB Infra, Wockhardt, M&M, Tata Chemicals, Indiabulls Housing Finance, TVS Motor, MRF, Suzlon, Nalco Pharma, Future Retail, Hindalco, Andhra Bank, SAIL and SPARC.
Table: 20 stocks that fell the most out of 119
After witnessing huge cuts in returns in the past few months, mid & small-cap stocks outperformed benchmark indices by a wide margin in the past week. This suggested that that broader market is showing some signs of bottoming out.
But, can we say that they have bottomed out and this might be the right time to invest? Well, the technical setup for midcaps looks slightly better than smallcaps but both are likely to underperform Nifty, suggest experts.
“Though both indices continue to underperform the Nifty 50 index, the midcap index is better placed,” Arun Kumar, Market Strategist, Reliance Securities told Moneycontrol.
Investors should use the opportunity and invest into stocks based on certain qualitative and quantitative parameters and look for stocks in sectors which are showing signs of revival or outperformance, suggest experts.
One needs to understand why a particular stock has fallen and if the fall is based on some external factor, then it is just a rub-off effect, if not, then it is better to stay away or investigate more before investing.
“The broader market has seen its worst period in last many years. According to us, the pain is likely to remain for a while but it may not be as brutal as it has been. In fact, there are a few pockets like auto and metal which are showing some early signs of revival, Sameet Chavan, Chief Analyst - Technical & Derivatives at Angel Broking told Moneycontrol.
“Most of the retail participants try to catch stocks which are trading in two digits, which according to them are “CHEAP” and “POTENTIAL” candidates for becoming multibaggers. First of all, it’s very important to remove this notion, and only after doing a proper study, one needs to filter out marquee names within various sectors and bet accordingly, he said.
Ritesh Ashar - Chief Strategy Officer - KIFS Trade Capital suggests some qualitative measure which investors can scan before investing:
“Long-term investors should not time the market, these 5 factors should be taken into consideration if one is willing to invest for a long term horizon,” he said.
Most of the weightage should not be given to quantitative analysis but equal weightage should be given to qualitative analysis as well such as:
- The company should have a competitive advantage
- Visionary top management
- Ethical environment (following corporate governance)
- Product line
- Market share
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