One-fifth of Nifty 500 shares are trading below pre-Covid levels

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Despite the sharp rise that took Indian stock markets to record highs, about a fifth of stocks in the Nifty 500 Index, a collection of the nation’s largest companies, generated zero or even negative returns as their stocks languished in below their previous level. -the levels of covid.

Many brokerages are taking a pre-covid period before January 17, 2020, when India issued its China Travel Avoidance Advisory.

Numerous stocks such as ITC Ltd, Bharti Airtel Ltd, Maruti Suzuki India Ltd, ONGC Ltd, Indian Oil Corp Ltd, Coal India, HDFC AMC, PVR Ltd, Bata India Ltd, L&T Finance, Inox Leisure, Indusind Bank, RBL Bank, Bandhan Bank, Punjab National Bank are still trading below their pre-pandemic levels.

Meanwhile, the benchmarks Sensex and Nifty both hit a record high on June 28, while the Nifty 500 index hit a record high on June 16.

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“While benchmarks have hit record highs over the past two weeks, there are still a large number of stocks trading below their pre-covid prices. We believe that the ambiguity over the recovery of profits for certain sectors in the context of covid-19 and the deterioration of margins as well as the increase in working capital requirements weighed on equities performance. We believe that accelerating the vaccination program and opening up a full economy in the coming months would be key catalysts for sectors such as hospitality, tours and travel, hotels, and more. Said Binod Modi, head of strategy at Reliance Securities.

Analysts attributed the negative or low returns of some popular auto and auto ancillary stocks that are actively traded on futures and options to slowing earnings due to falling demand due to lockdowns imposed by many states on the market. across the country in recent months.

Among banking and financial stocks, lenders, which experienced relatively larger declines due to the loan moratorium announced last year and the rise in bad debts, have fallen behind. In the rapidly evolving consumer goods area, ITC posted negative returns due to weak demand from the cigarette and hotel industries. Oil and gas stocks were also impacted by falling crude oil prices last year and weak demand. In the telecommunications sector, Bharti Airtel has given negligible returns since the start of the pandemic in the absence of tariff increases since last year, analysts said.

“Overall, we believe that the growth phase should return in these sectors from the third quarter of FY22 thanks to the economic measures taken by the government and the good demand which started to recover after the release. “said Akhil Rathi, advisory vice president at Marwadi Actions and Finance.

The companies that have seen the biggest erosion in their stock prices since the start of the pandemic are Future Retail Ltd, Yes Bank, Future Consumer, DCB Bank, GE Power, Chalet Hotels and Raymond, which have lost 40 to 81%.

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