These stocks rallied up to 1370% in 20 months despite market rout

New Delhi: Over the last 20 months almost 90% of BSE listed stocks witnessed sell off with as many as 105 companies falling over 90% since January 2018. Many of these companies have even wiped off 99% of investor’s wealth. The BSE Smallcap index has corrected 15.50% while the Midcap index shed 12.40% in the last 20 months since January 2018. The benchmark BSE Sensex is up 1.20% since then.

But there are few stocks which survived this market rout and rewarded investors handsomely rising over 1000% in the last 20 months. These stocks are from sectors like chemicals, consumer food, pharma, shipping, telecommunications, plastic products and even from NBFC, that is going through a severe liquidity crisis.

According to a report in a leading business daily, Coastal Corporation, which deals with aquaculture seafood products, has topped the chart by rallying 1370%. From Rs 16.90 on January 1, 2018, the stock has grown to Rs 249 as of August 7, 2019. Grandeur Products and Darjeeling Ropeway have grown up by 557% and 530% respectively in the last 20 months time frame. Leading Leasing Finance, which is in the NBFC space, has soared 530% during the same time frame.

Others include Tiaan Ayurvedic, Satia Industries, Capital India, Procter & Gamble Health, Ugro Capital and Refex Industries, whose shares have gained 200-500% during this period, the daily said. Worth mentioning here is that the rally in these stocks came in a phase when the broader markets were facing severe selling pressure amid the NBFC crisis, selling by foreign institutional investors and corporate governance issues.

Analysts see higher chances of earnings downgrade across sectors owing to the overall economic slowdown and falling consumption demand. “Earnings disappointment may lead to market volatility and we recommend buying quality companies (having reasonable earnings growth forecast) that are available at a reasonable valuation,” the daily quoted as saying Antique Stock Broking.

It may be noted that past performance does not guarantee or in anyway indicate future returns of a stock. So, it is important that one should do own research or take guidance from financial advisers before taking position in any such stock.

Stocks like Maestros Electronics, Apollo Finvest, East West Holdings, Jump Networks, Sadhana Nitro Chem, IOL Chemicals, Kavit Industries, Responsive Industries, Prabhat Technologies, Valiant Organics, Seamec and Apollo Tricoat Tubes have advanced over 100% during the last 20 months.

Companies like Jyoti Resins, Vinati Organics, Cantabil Retail and NIIT Technologies gained over 90% between January 1, 2018 to August 7, 2019.

“Investors should analyse whether a business model and its longterm prospects are intact or not, if a business qualifies as a going concern (given the risk of bankruptcy due to unsustainable financial leverage), if it is facing temporary challenges like aggressive competition or cyclical downturn; and whether the valuation stands at the lower end of a long-term range,” ICICI Securities said.

Some investors hold on to the falling stocks expecting a rebound. But according to the business daily, since 2010, only eight of the 228 stocks that corrected more than 75% from their peak levels have returned to their previous highs.