Nifty – Top Gainers and Losers
May is the IPO month, starting with the much-awaited IPO of the LIC. At least ten other companies, including Delhivery, Paradeep Phosphate, E-mudra, and Venus pipes, among others, have lined up their IPO. The market will test the commitment of DIIs, Retail investors, and Nifty traders in May.
With all the negative news and events, there are many shares in the Nifty 50 that have shown impressive returns between 10 to 28 percent year-to-date. Looks like there is no impact of geopolitical tensions, falling Indian rupee, FIIs selling, rising bond yields, weak Q4 results, and inflation concerns on these shares.
There are shares that are heavily affected because of the negative news and events mentioned above. The below top ten losers have lost between 10 to 30 percent year to date. These shares have kept the positive news, like improved GST collection, auto sales numbers, and better manufacturing PMI numbers on the back burner.
We calculated the below gainers and losers using the difference between the closing price of Dec 31, 2021, and April 29, 2022.
View the list of all the Nifty 50 contributors.
Nifty -Top Gainers
Below are the year-to-date top ten gainers on Nifty 50. Gains in the names like NTPC (up 25.81 percent), Coal India (up 25.34 percent), and Power Grid (up 11.76 percent) could be because of power crises in many States, and a surge in power demand. This could also be because of sector rotation to low volatility blue-chip stocks.
The increase in gross refinery margins contributed to impressive gains for ONGC (up 12.68 percent) and IOC (up 12.50 percent).
In the auto sector, especially the two-wheeler segment growth is impressive and both the Bajaj Auto and Hero motor are gainers up till now. Though Hero motor’s Q4 profit declined because of weak volumes but the recently reported April month volume numbers are impressive.
In the four-wheeler segment, the shortage of electronic components and semiconductor availability can limit the growth prospects in the short term.
Nifty -Top Losers
Below are the year-to-date top ten losers on Nifty 50. Out of the top ten, four names are from the IT sector. Tech Mahindra is down 29.70 percent, Wipro down 28.81 percent, HCL Tech down 18.20 percent, and Infosys down 16.95 percent. The IT sector’s downfall is mostly because of bad Q4 results, pricing pressures, and geopolitical tensions.
The banking finance insurance segment BFSI up till now has not done well. HDFC and HDFC Life both are year-to-date top ten losers among other banking and finance-related stocks. Though the banks have posted good Q4 results, credit growth is likely to pick up further during the year. The prospects are better for this segment for the rest of the year.
Will the leaders become laggards and the losers will become leaders in the future? Only time knows the future direction of the above twenty shares.
FED & RBI
The FED will announce its rate hike-related policy decision on Wednesday, May 4. Ahead of the FED meeting, the RBI has raised the repo rate by 40bps and CRR by 50bps, showing a reversal of the easy liquidity policy. This rate hike was not entirely unexpected because of strong inflationary pressures. The rate hike will reduce liquidity in the economy. For banks, the cost of funds and cost of deposits both are likely to increase.
The 10-year bond yield has increased to 7.4 percent, showing a rise in the cost of funds. For some corporates, this would be a double whammy because of rising input costs and rising interest rates. For Individuals, the loan EMIs will increase.
Nifty – Sector Weights
In the Nifty 50 index, the weight of sectors that are struggling is the IT sector, 16.15 percent, and the Financial Services, 34.82 percent. The combined total weight of these two sectors is close to 51 percent in the Nifty 50 Index.
While the weight of sectors that are showing growth are Oil and Gas 14.62 percent, FMCG 7.75 percent, and Automobile plus Auto Components 5.17 percent. The combined total weight of these three sectors is 27.54 percent in the Nifty 50 Index. And if you add the weight of Index heavyweight Reliance 12.86 percent to it, the total comes to 40.4 percent.
The odds are not in favor of meaningful gains for the Nifty 50 index in the short term until the Banking, Finance and IT sectors get cracking. As noted in an earlier blog, the bias is definitely bearish because of volatility and global uncertainties. Historically volatile season has started and we expect gains to be limited in the short term. In the short term, there can be more pressure on the vulnerable equity shares.
This article is only for educational purposes and is not investment advice. Please consult with your investment advisor before investing.