Several high quality stocks from the midcap space as well as some of the larger cap stocks are nowhere close to their 52-week highs. Here are a few high quality stocks, that are just 10 per cent away from their 52-week lows.
Stocks that are very close to their 52-week lows.
|52-week low price||Current Market price|
|LIC Housing Finance||Rs 376||Rs 396|
|Bajaj Consumer Care||Rs 241||Rs 251.55|
|Hindustan Zinc||Rs 191||Rs 197|
|L&T Finance Holdings||Rs 88||Rs 94|
|Zee Entertainment||Rs 258||Rs 274|
|Coal India||Rs 178||Rs 194|
|BIOCON||Rs 211||Rs 217|
|Oil India||Rs 141||Rs 147|
|ITC||Rs 234||Rs 249|
These are just examples of some good high quality stocks that are languishing near 52-week lows. The broader markets continue to suffer, whereas a few stocks like HDFC Bank and ICICI Bank pull the indices to just a few per centage points higher from record levels. This is not a really good trend and most investors have lost money even in extremely high quality names.
Promoters lapping-up shares
Some promoters have been busy buying their shares as value has emerged. Last financial year, we have seen companies like Srikalahasthi Pipes, Bajaj Auto, Nandan Denim, Bodal Chemicals, Waterbase, Trident, Sangam (India) etc., hike their stake, showing confidence in their companies.
Going ahead, we might see several other companies do exactly the same, as value emerges.
The problem right now is that unless the broader markets rally, there is no point in talking of the index reaching record levels. A few index stocks are being chased by institutions, which is resulting in a solid rally, while the broader markets continue to suffer. A frustrating part of investing is to see the markets scale near record highs, while the portfolio of investors remain stagnant. On the other hand, when the markets fall, the portfolio of investors come crashing down, because nobody is interested in the broader markets.
Markets to test patience
The markets are likely to continue to be skewed in favour of a few stocks. This is until institutions stop chasing a few select stocks that push the indices higher. At the moment it seems extremely frustrating for small investors to see just a few stocks rallying. The only thing is to just wait year-on-year for some dividend. Of course, if you own shares like IndiaBulls Housing, you would receive dividends 4 times a year. If you own stocks from the PSU space like HPCL, BPCL, you might end-up getting dividends a couple of times a year. At the moment it seems the wait is going to be long and painful. If economic recovery takes shape faster, we might see a faster recovery in the broader markets or you have to just see stocks like HDFC Bank, ICICI Bank etc., hit fresh 52-week highs, while the broader markets go nowhere.