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8 stocks that underperformed Sensex so far in 2017, even as markets soar

LiveMint logoLiveMint 27-04-2017 Nasrin Sultana

Mumbai: As the markets scaled record highs, 8 stocks underperformed peers on the Sensex in 2017. The Sensex hit a record high of 30,165.77 points, surpassing the psychological 30,000 level, while the Nifty touched 9,351 on Wednesday.

Among Sensex stocks, Dr Reddy’s Laboratories Ltd lost 14.4% year-to-date. Infosys fell 9.6%, Lupin dropped 7.5%, Oil & Natural Gas Corp. Ltd (ONGC) dipped 4.3%, Tata Motors fell 4.2% while Cipla lost 3.2% so far in 2017. Tata Consultancy Services Ltd and Coal India Ltd fell 1.8% and 1.5%, respectively, in the period. In contrast, both the Sensex and Nifty gained 13-14%, while BSE Midcap and BSE Smallcap indices surged 23.07% and 27.73%, respectively, in the same period.

Despite positive sentiment driving liquidity to the markets, the contribution of technology and pharmaceutical stocks to the market rally has been minimal. BSE IT index fell around 5% in 2017, while BSE Healthcare jumped marginally by about 2%.

Stronger rupee which is hovering around a 20-month high has been also causing trouble for IT and pharma companies which earn revenue in foreign currencies. Besides forex, IT stocks were under selling pressure given the concerns of US protectionist measures after Donald Trump won as President, while compliance issues have been plaguing pharma stocks.

Issues concerning the IT sector also led fund managers to reduce exposure to it. According to Morningstar Investment Adviser India Pvt. Ltd, “While managers didn’t sell large positions, there weren’t any major additions either, thus on an overall basis the technology exposure came down significantly. TCS was one of the counters that witnessed some selling.”

Meanwhile, for a stock like Tata Motors, forex loss and concerns of Bharat Stage III (BS III) vehicles in the domestic market may have hit investors’ appetite.

Kotak Institutional Equities said investors are actively rewarding or punishing stocks despite the oft-repeated argument of liquidity driving the market, and stocks and valuations have perhaps stopped mattering, given the linear extrapolation of incremental news.

“The market’s reaction to Q4FY17 results has been quite varied depending on the sector as favoured sectors among banks and cement have been rewarded handsomely for low quality and modest beats or even in-line results while unloved sectors such as IT have been punished,” the brokerage firm said in a report on 25 April.

Among the gainers, Reliance Industries Ltd was up 31.27%, L&T 29.67%, while GAIL and HDFC Bank soared 29% and 28.4%, respectively. Asian Paints and ITC jumped around 20% each so far in 2017.

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