Market reels under selling spree but these 70 stocks buck the trend

The market corrected more than 6 percent in the last two weeks with selling pressure across sectors tracking tizzy global counterparts, but these 70 stocks bucked the trend and provided double-digit returns in the same period.

The market in the middle of September gradually turned volatile immediately after hitting the highest level since April and caught in a bear trap following the downtrend in global peers as the recession fears in West started increasing with the aggressive policy tightening by central banks, including Federal Reserve to control the inflation.

FIIs also started withdrawing money from emerging markets, including India, through the last couple of weeks, turning net sellers so far in September, offloading equities worth Rs 7,500 crore as against Rs 22,000 crore of buying a month back.

Most of currencies have been seeing weakness as the US dollar strengthened further. The Indian rupee itself hit record low of 81.66 as against the US dollar in the previous session, weakening consistently from September 13 after a rangebound trade for couple of months.

The US dollar index, which measures the value of the US dollar against a basket of world’s leading six currencies, jumped to a fresh 20-year high of around 114 levels, while the US 10-year treasury yields moved closer to 4 percent now.

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“The dominant dynamic roiling equity and currency markets globally is the combination of relentless rise in dollar and the sustained rise in US bond yields. So long as this trend continues, equity markets will be under pressure,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

FPIs turning big sellers in India – Rs 5,101 crore in cash market in previous session – is an indication of the risk-off in equity in emerging markets, he said.

However, in such a subdued environment, more than 70 stocks on the NSE delivered double-digit returns in the last two weeks since closing of September 13 that are largely from categories of either small-caps or below.

Of which, top nine stocks – TRF, Upsurge Seeds of Agriculture, MK Proteins, SAL Steel, Mask Investments, Regency Ceramics, Vadivarhe Speciality Chemicals, Salasar Exteriors & Contour, and A and M Jumbo Bags – rallied more than 50 percent in the same period.

Further, Lexus Granito (India), Felix Industries, Bombay Super Hybrid Seeds, AVG Logistics, Oil Country Tubular, Cyber Media (India), Transformers and Rectifiers India, Kshitij Polyline, Rachana Infrastructure, Aarvi Encon, Power Mech Projects, Airo Lam, Shreeoswal Seeds & Chemicals, Sarveshwar Foods, AVSL Industries, Mcleod Russel (India), DB Realty, Shree Tirupati Balajee FIBC, Innovana Thinklabs, ANI Integrated Services, Global Education, Goldstar Power, and Poddar Housing and Development registered 25-48 percent in last two weeks.

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In the same period, the Nifty Midcap 100, Smallcap 100, Midcap 150, MidSmallcap 400, Smallcap 250 and Smallcap 50 were down 7-8 percent.

Going ahead, most of experts expect the volatility to continue in coming days ahead of the outcome of the RBI policy that will be scheduled on coming Friday, following by corporate earnings next month.

“In the context of rising US bond yields, RBI will be forced to raise rates by around 50 bp on September 30th. This will be another negative for equity markets,” Vijayakumar said.

In brief, he thinks except for falling crude there are no positive triggers for the equity market now. International benchmark Brent crude futures corrected more than 30 percent in the last three months amid worries over demand outlook.

Hence, this is not the time to aggressively buy the dips. There is scope for selective buying in the broader market. There are stocks rising even in this weak market. These are signals of accumulation on strong fundamentals, the expert said.

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