During the year, the big boys scorned at the ‘madcap rally’ and issued death warrants against SME IPOs that doubled on listing day but optimists were the ones who laughed their way to the bank.
Smaller stocks outperformed Nifty by a wide margin as the index is up only about 8.5% since last Diwali while Nifty Smallcap50 is up 38%, Nifty Microcap 250 has advanced 51% and Nifty SME Emerge has zoomed 69%.
Two sectoral indices – Nifty Bank and Nifty IT – which attract most of the attention went up only about 5-8% each. The lesser-tracked Nifty PSU Bank turned out to be the highest scorer during the period with 53% return. Nifty Realty, which rallied over 10% last week, is up about 50% since last Diwali. Defence and PSU indices have also outperformed.
Retail investors, who are always on the lookout for hidden gems, made bolder moves with below-the-radar stocks and were aptly rewarded. An analysis of all NSE-listed stocks with a market capitalisation of over Rs 500 crore shows that at least 238 stocks have given multibagger returns since last Diwali.
Topping the charts is smallcap Remedium Lifecare, which has given a jaw-dropping return of 2,122% since last Diwali. Andhra Cements, SG Mart, Jai Balaji Industries and K&R Rail Engineering have also skyrocketed over 1,000%.
Other multibaggers in the list include K&R Rail Engineering, Lloyds Enterprises, Titagarh Rail Systems, RVNL, Jupiter Wagons, Suzlon Energy, Saksoft, Apar Industries, Ircon International, IRFC, Newgen Software, Mazagon Dock Shipbuilders, UCO Bank and Kalyan Jewellers.
Barring Adani Group stocks, investors have lost money in PC Jeweller (down 70%), NIIT (down 59%), Brightcom Group (54% loss) and Fairchem Organics (46% loss).
What should investors do?
Samvat 2079, which saw the market making sharp recovery from its March 2023 bottom, has left investors more bullish on India for Samvat 2080 despite ‘higher for longer’ interest rates, volatile bond yields, geopolitical conflicts in the Middle East, and fluctuating oil prices.
“Post-decent 11.1% earnings growth in FY23, we expect net profits of the Nifty-50 index to grow by 15.5% (EPS of 960) in FY24E and by 12.2% (EPS of 1079) in FY25E. At 19,000, Nifty trades at 19.8x FY24E and at 17.6x FY25E. We find the valuations of the Nifty-50 index to be more reasonable at 17.6x FY25E EPS in the context of moderate earnings growth and muted performance over the past two years,” Kotak Securities said.
Diwali stock picks
Sharekhan has released a list of 15 high-quality stocks, primarily centered around the domestic upcycle theme, with some quality picks to leverage greenshoots in the export market. Top picks are – Bank of India, Bharat Forge, Birlasoft, BSE, DLF, Garware Hi-Tech, Gokaldas Exports, HAL, Kirloskar Oil Engines, Kolte-Patil Developers, L&T, Sanofi India, Tata Motors and Wonderla Holidays.
SBI Securities has advised clients to focus on sectors like Consumption, Auto, BFSI (Banks, AMCs, Insurance, NBFC, Stock market intermediaries), Real Estate, Travel & Tourism, Engineering & Cap Goods, Telecom and fast growing sectors like Renewables, EMS etc .
Kotak’s list of 8 ideas for Samvat 2080 include Canara Bank, Cipla, Cyient, Dalmia Bharat, Godrej Consumer, Macrotech Developers, PCBL and RIL.
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)