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Banks, commodity & discretionary stocks among the worst hit

FMCG and pharma stocks are expected to be the least affected and offer higher earnings stability.

, ETMarkets.com|
Last Updated: Mar 23, 2020, 07.55 AM IST
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UPL’s leveraged balance sheet and a sharp drop in earnings are a major concern.
Only a handful of stocks are left standing in Mumbai after relentless waves of price destruction battered Indian equities through the past few weeks.

The worst hit among the Nifty companies are banking & finance, commodity and discretionary stocks, as these companies remain more vulnerable due to falling demand and increasing debt.

Seven out of the 10 biggest losing stocks on the Nifty are from these sectors, with IndusInd Bank losing the highest (61 per cent) given its high exposure to vulnerable sectors including real estate, gems and jewellery and telecom.

Tata Motors (down 51 per cent) is the next biggest loser, as the company’s JLR business is unexpectedly down globally — retail sales in February in China, its biggest market, were down 85 per cent and the demand is expected to remain weak for some time. It heavy debt of nearly Rs 50,000 crore is a concern too.

UPL’s leveraged balance sheet and a sharp drop in earnings are a major concern. UPL’s debt to EBIDTA is more than 3 times and the Street expects a further drop in earnings. Vedanta and Hindalco were hit due to sharp falls in commodity prices including crude, aluminum, zinc, silver and copper. Both the stocks are down 48 per cent and 44 per cent, respectively.

Stocks snip 1

The Nifty is down 28 per cent in the past one month. But FMCG and pharma stocks are expected to be the least affected and offer higher earnings stability in the Nifty 50 pack. None of the 8 pharma and consumer stocks have lost more than 20 per cent. Asian Paints remains the best performing stock losing only 7 per cent as the company will benefit sharply from the fall in crude prices (used as raw material).

Yes Bank is the only stock to have given positive returns — up 30 per cent in one month.
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