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Top ten stocks that have plunged up to 86% since March; here's what investors should do

Both Sensex and Nifty might have slipped a little over 10 per cent since March when both indices created their top for the year 2015.

, ET Online|
Updated: Jun 16, 2015, 02.01 PM IST
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Both Sensex and Nifty might have slipped a little over 10 per cent since March when both indices created their top for the year 2015.
Both Sensex and Nifty might have slipped a little over 10 per cent since March when both indices created their top for the year 2015.
NEW DELHI: Both Sensex and Nifty might have slipped a little over 10 per cent since March when both indices created their top for the year 2015, but there are more than 20 stocks that have plunged over 50 per cent in the same period.

Stocks like Adani Enterprises (down 86%), Mastek (down 66%), Unitech (62%), KPIT Technologies (down 53%), Monnet Ispat (down 49%), JSPL (down 49.8%), Adani Power (47%), Educomp Solutions (53%), Punj Lloyd (44%), and Jet Airways (38%) have underperformed benchmark indices by a wide margin, according to data collected on 12 June.

Both Sensex and Nifty are trading below their 200-days moving averages (DMA) and most analysts on Dalal Street see further declines in the short to medium term. The 50-share Nifty could slip to 7700-7600 before recovering , as most of the bad news flow has been factored in.

Indian stocks retreated sharply last week on concerns of China A shares getting included in MSCI index. However, the MSCI deferred the decision, bringing relief to the Street.

"I do not think there is too much of a downside left as far as Indian markets are concerned. We have the 17th US FOMC meet, so there will be some statements coming out regarding the interest increase as far as US Fed is concerned. That will, of course, be an event to watch out for along with Greek issue," says Sudip Bandyopadhyay, President, Destimoney Securities Pvt Ltd.

"On the macro front, the progress of monsoon will be extremely important as far as Indian markets are concerned. We believe that there is a possibility of the market moving to 8500 levels earlier than say 7700 level," he adds.

Bandyopadhyay is of the view that markets may come only down slightly from the current levels if there are some negative news flows.

Nifty Futures tumbled during the week to hit their lowest closing level in more than 33 weeks, despite positive news of India's current account deficit (CAD) narrowing sharply in Q4 March 2015 from Q3 December 2014, according to data released by the Reserve Bank of India (RBI) on 10th of June 2015.

High volatility was witnessed during the week and market breadth, indicating the overall health of the market, was negative. Nifty has breached its major support mark of 8,000 and analysts fear that bears might be in charge for the next few months.

"However, if Nifty manages to sustain below the levels of 8000, we can expect the steep downside movement, and test the levels of 7600," says Rohit Gadia, CEO & founder, CapitalVia Global Research limited.

"Further breach of this level can see nifty slide by another 200-250 points. Thus, sell-on-rise can be a good strategy," he adds.

Traders might face a difficult time for the next 2-3 months, but if you are an investor, it is a great time for someone who is looking to build a portfolio from a perspective of 2-5 years.

Based on long-term trends and Elliot Wave counts, analysts see this bull market continuing for another 18 months, and investors should consider the recent sharp declines as an opportunity to build fresh positions.

"This correction already consumed 3 months with a price damage of around 13 per cent. So, it is nearing its end and critical supports are placed around 7812 for next week," says Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in.

"Once market stabilises, it will resume its upmove and should ideally make new lifetime highs over a period of time. In the next 9-12 months, ideally Nifty should be trading around 9850 levels," he adds.

"We advise traders/investors to completely avoid counters which have seen a cut of 40%-50% in recent correction and trading around close to their lifetime lows or around bear market lows of 2008," he adds.

 

We have collated a list of stocks which have slipped up to 86 per cent since March:


Top ten stocks that have plunged up to 86% since March; here's what investors should do

Analyst: Rohit Gadia, CEO & founder, CapitalVia Global Research Ltd

Adani Enterprises Ltd: Reason for a steep fall in Adani Enterprises is more news-based (corporate restructuring) than technical. It's looking weak on charts, so investors should step out from the stock and wait for next entry level

Mastek Ltd - Mastek is further looking bearish on charts. Thus, to avoid running losses, it's better to move out of the stock for the time being. Shares of the software company nosedived last week, as the stock price adjusted for demerger of its insurance business.

Mastek on June 4 informed BSE that June 15 has been fixed as record date for the purpose of determining the members of Mastek Ltd to which shares of Minefields Computers will be allotted in the ratio of 1:1.

Unitech: Investors can hold positions in Unitech, as, technically, slight rounding near the bottoms can be expected. Moreover, the stock is testing its support level well, which is a strong indication of a bounce-back from the lows. Investors can add a few positions at this level to average out the existing position.

KPIT Technologies: Investors can hold positions in KPIT for the time being, as a strong comeback can be expected if the stock manages to cross the levels of 107. Thus, we will suggest to hold the stock. To avoid running into further losses, one can place a stop loss at 91. A breach of this level can result in further slide in the stock price.

Monnet Ispat Ltd: The overall trend of the stock is bearish. But, it is advisable to hold the stock for the time being with a stop loss order to be marked at Rs 27. Levels from 15-27.65 is a strong support zone from where a bounce-back can be expected.

Analyst: Mazhar Mohammad, Chief Strategist - Technical Research & Trading Advisory, Chartviewindia.in

Adani Power, Educomp, Punj Lyod: Scrips from small and midcap space like Adani Power, Educomp, Punj Lyod, which almost made new lifetime lows, should be completely avoided unless some strong fundamental developments take place in those counters.

Jindal Steel and Power Ltd: The stock is trading close to 2008 lows of 86 . A bounce can be expected from these lows which should be used to exit. Hence, if someone is holding this counter, they should do so with a stop below 86 on closing basis.

Jet Airways Ltd: Jet Airways, which has lost around 40%, appears to be moving in a triangular pattern with lower tops but with higher bottoms since 2010, and appears to be in the last leg of completion of this contracting structure. Hence, long-term investors can accumulate this counter in the zone of 250-240 with a stop below 239 on closing basis.

(Views and recommendations expressed in this section are the analysts' own and do not represent those of EconomicTimes.com. Please consult your financial advisor before taking any position in the stocks mentioned.)

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