Earlier this week, as many as 400 stocks touched their 52-week lows including names like Vedanta IndiaBulls Housing, Mahindra and Mahindra, MRF etc.
While the Sensex is at 35,600 points, several stocks are hitting their 52-week lows, as only heavyweight stocks like Reliance Industries, TCS, Infosys and HDFC Bank are holding the Sensex at such higher levels. The broader markets have virtually collapsed.
In fact, dividend yields have become very attractive in many stocks. Take the case of a very few examples like IndiaBulls Housing, Reliance Capital and Graphite India. These are just a few examples, where the dividends yields and evaluation of the stand alone business has made them good bets.
The shares have collapsed from levels of Rs 500 to Rs 140, taking the dividend yield to a solid 8 per cent. IndiaBulls housing has collapsed from levels of Rs 1400 to Rs 600, taking the dividend yield to near 7 per cent.
Fundamentally speaking, based on information in the public domain, there seems to be nothing wrong with these companies. Yes, the ADAG has problems with RCOM, but, Reliance Capital per se looks good. Its subsidiary, the mutual fund manages billions of dollars in investor money and the General insurance business is doing well.
IndiaBulls Housing has been hit due to problems in the NBFC space, DHFL related issues and the like. The company's own quarterly numbers were not too bad and the dividend yield continues to be near 7 per cent.
Graphite India is another stock that has plunged from levels of Rs 1200 to the current levels of Rs 410. Here again, the dividend yield on the stock itself is a decent 4 per cent. There are many such stocks that have now turned attractive due to their dividend yields.
At some stage as valuations come to the fore, we may see markets staging a comeback. It is a good idea to buy into beaten down names.