Latest news with #NSE500
Time of India
a day ago
- Business
- Time of India
Market breadth narrows: 60% of NSE 500 stocks still 20% below 2024 highs; analysts flag overvaluation, weak earnings outlook
While benchmark indices like the Nifty 50 and Nifty 500 have rebounded and now sit 5–6% below their September 2024 record highs, a majority of the broader market continues to lag, with over 60% of NSE 500 stocks still trading more than 20% below their 2024 peaks, according to an ETIG study. The surge earlier in 2024 had lifted many stocks to lifetime highs, but since the September reversal of a four-year bull run, the rebound has been uneven. As per the analysis, 118 stocks in the Nifty 500 are 20–30% off their 2024 highs, 83 stocks are 30–40% below their peaks, and another 113 are trading more than 40% lower. In contrast, the Nifty 500 and Nifty 50 indices are 6.1% and 5.3% away from their respective highs. 'This points to a narrow market rally, often driven by specific sectors or large-cap names,' Sudeep Shah, vice president and head of technical and derivative research at SBI Securities, told ET. He noted that the broader mid- and small-cap segments remain sluggish despite the overall index recovery. Some of the worst-hit stocks include Jaiprakash Power Ventures, Network18 Media & Investments, Zee Entertainment Enterprises, Sammaan Capital, and Suzlon Energy, which are all down between 84% and 97% from their all-time highs. Others like Adani Total Gas, MMTC, Yes Bank, HFCL, and Vodafone Idea are also significantly off their peaks. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like No annual fees for life UnionBank Credit Card Apply Now Undo Only four stocks—Laurus Labs, Fortis Healthcare, Shyam Metalics & Energy, and Torrent Pharmaceuticals—are trading above their 2024 highs. Despite these declines, elevated valuations persist in many segments. 'Even a reasonably high growth company cannot be expected to deliver 35–40% growth to justify the valuations,' said Ashwini Shami, EVP and senior portfolio manager at OmniScience Capital. 'The overvaluation is not over in the small and midcap stocks and these stocks are not expected to go back to the previous highs as that momentum was driven primarily by euphoria,' he told ET. Between September 2024 and February 2025, the Nifty 500 declined 18.8%, while the Nifty Mid-cap 150 and Small-cap 250 indices dropped 20.6% and 25%, respectively. Over the past three months, mid-cap and small-cap indices have recovered 9.2% and 12%, respectively, with the Nifty 500 gaining 5.3%. Investors have turned selective amid concerns over corporate profitability and tariff-related uncertainty. 'Money is expected to flow to repriced pockets like the largecaps which are fairly priced, and within sectors, banks, housing finance companies, and financial services companies even in the mid and small-cap basket could offer investors a better bet,' said Shami. He added that infrastructure and power stocks also present opportunities, but investors must be cautious of elevated valuations. Shah pointed out that many midcaps and PSUs have surged more on sentiment, liquidity, and policy optimism than earnings. 'The valuations in some pockets have turned reasonable but are still trading at a premium to their historical averages in others, especially in sectors such as consumer durables, FMCG, and select midcap IT names,' he said. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
2 days ago
- Business
- Time of India
Why 60% of NSE 500 stocks remain below their 2024 highs
Mumbai: The Nifty 50 and Nifty 500 are 5-6% off their record levels in September 2024, but a large part of the market is yet to catch up despite the recent rebound in these indices. While most remain below their 2024 highs, at least 60% of the stocks on the NSE 500 index are still over 20% below those levels last year, according to an ETIG study. Analysts said these stocks may not cross their highs of 2024 in a hurry as concerns over elevated valuations remain, while the likelihood of an outsized earnings growth remains thin. The record-breaking rally in 2024 had pushed many stocks to lifetime highs at various points leading up to September-when the four-year bull run reversed. In the Nifty 500 index, 24.2% or 118 stocks are trading 20-30% away from their peaks hit in 2024, while 83 stocks remain 30-40% away from their highs and 113 are at least 40% below their highs. The Nifty 500 Index and benchmark Nifty Index are 6.1% and 5.3%, respectively, away from the peaks in September 2024. Explore courses from Top Institutes in Please select course: Select a Course Category healthcare Degree MBA MCA Technology Healthcare Data Science Digital Marketing Management Data Science CXO Product Management Finance Design Thinking Artificial Intelligence others Leadership Operations Management PGDM Public Policy Data Analytics Others Cybersecurity Project Management Skills you'll gain: Duration: 11 Months IIM Lucknow CERT-IIML Healthcare Management India Starts on undefined Get Details "This points to a narrow market rally, often driven by specific sectors or large-cap names," said Sudeep Shah, vice president and head of technical and derivative research, SBI Securities. While headline indices like Nifty 50 or Sensex have rallied, a significant portion of the market-particularly in the mid- and small-cap segments is still lagging, said Shah. Jaiprakash Power Ventures, Network 18 Media & Investments, Zee Entertainment Enterprises, Sammaan Capital and Suzlon Energy along with Adani Total Gas, MMTC, Yes Bank, HFCL and Vodafone Idea are among the stocks that are 84-97% below their all-time highs. Four stocks including Laurus Labs, Fortis Healthcare, Shyam Metalics & Energy and Torrent Pharmaceuticals are trading above their highs. Agencies Elevated valuations Ashwini Shami, EVP & senior portfolio manager, OmniScience Capital said that despite being 20-30% off the peaks, the broader market remains overvalued as the stocks that traded at 50 price to earnings (PE) ratio-a valuation measure-during the bull market before September, remain at around 30 times, even after a 30-40% drop in stock prices. "Even a reasonably high growth company cannot be expected to deliver 35-40% growth to justify the valuations," said Shami. "The overvaluation is not over in the small and midcap stocks and these stocks are not expected to go back to the previous highs as that momentum was driven primarily by euphoria." Between September and February, the Nifty 500 index slumped 18.8% while the Nifty Mid-cap 150 and Small-cap 250 indices tumbled 20.6% and 25%, respectively. In the last three months, the mid-cap and small-cap indices rallied 9.2% and 12% each while the Nifty 500 index gained 5.3% in the same period.
Economic Times
11-07-2025
- Business
- Economic Times
IT sector set for 2H25 comeback backed by low base, global tailwinds: Ambit Capital
After a muted first half, India's IT sector may be gearing up for a meaningful revival in the latter half of 2025. In this edition of ETMarkets Smart Talk, Nitin Bhasin, Head of Institutional Equities at Ambit Capital, along with Bharat Arora, shares why the sector is entering a favourable zone—driven by seasonality, an uptick in global tech demand, and contrarian signals like low index weight and weak CEO confidence. The duo also offers a detailed playbook for navigating FY26's volatile and concentrated market, including preferred sectors, fixed income strategy, and the rising importance of quality and low-volatility stocks in a stock-picker's market. Edited Excerpts - ADVERTISEMENT Q) Thanks for taking the time out. Nifty closed with marginal gains in June, but for the first six months of 2025, it is up over 7%. How do you see markets for the rest of FY26? Any big events to watch out for?A) We are in the phase of rise in stock market concentration, wherein market returns are muted, and large-caps outperform mid-caps and small-caps. This has been the case in CY25TD wherein large-caps (8%) have outperformed mid-caps (4%) and small-caps (relatively flat), and we expect this to worsen going forward. Time to be selective as FY26 is expected to be a stock-picker's market & we expect this trend to continue in FY27 as the next few months, we believe a key monitorable will be trailing market returns. Historically, moderation in returns has led to moderation in DMF equity flows, which have already halved since Dec-24. ADVERTISEMENT Even if markets remain at current levels, TTM returns of Nifty as well as top mid-cap & small-cap schemes are likely to remain muted/negative as base hardens, which can further exacerbate correction.Q) How are you managing the volatility in your portfolio? Any key learnings which you would like to share from 1H2025? A) Defensive sectors such as FMCG, Pharma and IT are the biggest OWs in our model portfolio, due outperformance in periods of rising market concentration. ADVERTISEMENT Historically, FMCG & Pharma have exhibited lower volatility in returns as compared to other 1HCY25, market breadth remained narrow with median stock (-0.5%) lagging the NSE500 index (5.5%) by ~6%. We expect this to continue going forward and expect CY25 to be stock-picker's market. ADVERTISEMENT Headline earnings growth is slowing down, with Nifty FY25 earnings at ~7%, while FY26E estimate stands at ~7%, the lowest in recent times. In such an environment, Quality and Low Volatility factors outperform, which has been the case over the past year. Q) One of the reports suggested that India Inc.'s profits have grown nearly 3x faster than GDP since FY20. What structural factors are driving this divergence? A) Since the pandemic, India Inc. has focused on balance-sheet deleveraging instead of capex investments, which led to lower interest costs. ADVERTISEMENT As a result, profit margins and return ratios have significantly improved, which has led to 21% CAGR growth in BSE500 PAT over the last 5-years as compared to ~8% CAGR GDP other structural factor driving this has been shift in market share from unorganized to organized players across businesses have gained scale, pricing power, and profitability as informal competitors exited or struggled to growth in employee cost has declined from 9% in June-20 to 5% in Mar'25, which has also been a trigger for high profit growth. Q) With the China+1 theme gaining traction, which Indian sectors are best placed to attract global capital and scale? A) India has struggled to capitalize fully on the 'China +1 strategy' with NITI Ayog, the government's think tank admitting limited gains so far. Electronics has seen the biggest gains with Apple's plans for continued expansion in India (despite Trump's threats) highlighting the country's growing foothold in the global electronic supply chain. This has also benefited Indian EMS players which have seen a lot of traction from both import substitution and exports. As China vacates lower value-added manufacturing, textiles, toys, engineering goods, and pharma stand to gain. Q) How is fixed income as an asset class looking for long-term investment? How much money should one allocate as a hedge to combat volatility? A) Our GRIP framework (Growth, Risk premium, Inflation and Positioning) suggests a weak outlook for equities and asset allocation in favor of earnings growth slowing down (FY26E estimate is one of the lowest starting earnings growth estimates in recent times) and valuations remaining elevated, we do not expect significant outperformance of equities over risk premium is increasing due to growth slowdown, whereas reduction in inflation makes bonds more the long-term, favourable macroeconomic conditions and structural drivers like resilient domestic demand, fiscal consolidation, and global bond index inclusion should support the bond market. Should global uncertainties and geopolitical tensions abate, benign/stable inflation and lower interest rates would remain positive Nifty has considerably outperformed bonds over the last decade. While market returns can be volatile in the short-term, equities remain the best-performing asset class over a longer horizon. Q) Which sectors are likely to remain in the spotlight in 2H2025? A) IT exhibits strong seasonality wherein bulk of returns (~17% median) are generated in 2nd half of the year (2HCY1HCY). There has been marginal improvement in S&P500 CY25E revenue growth, which exhibits a strong correlation with tier-1 IT revenue triggers such as exposure to the Quality factor (outperforms in an earnings growth slowdown environment) & IT index weight at a 16-year low, should lead to IT outperformance in CEO confidence index is at one of the lowest level, which is a strong contrarian indicator for IT outperformance. Q) Can we say that we are in a "stock picker's market" ahead? If yes, what are the key traits investors should look for in FY26 picks? A) Yes, we are in a stock picker's market. Earnings growth seems to be the key. Stocks with moderate by predictable earnings growth should be preferred over high growth stocks with risk to earnings a factor perspective, we prefer Quality and Low volatility stocks which have historically outperformed in an earnings growth slowdown India's structural story remains intact, we are in a cyclical slowdown at the mid-cycle. Historically, Nifty's earnings estimate trajectory used to be revised downwards each year (~8%) leading up to the financial year but earnings cuts were minimal in this cycle, which have now government is deploying counter-cyclical tools like repo-rate cuts, CRR cuts, tax relief, and fiscal spending to revive demand and boost growth. Q) Gold has also seen a tremendous run in 2025 – how do you see the yellow metal shining in 2H2025? Time to book profits or add on dips? A) Elevated geo-political uncertainty led to significant rise in gold prices over the past few quarters. However, we believe that within commodities, its silver's time to Silver/Gold ratio currently trades at -1 S.D below its LTA (7-year) and we expect mean reversion to manifest & gold to underperform silver in the near-to-median industrial demand (accounts for ~50% of total silver use) is surging. Green energy policies globally are amplifying silver's role as a key industrial the supply side, mine output remains constrained due to high operational costs and lower ore grades. This supply-demand mismatch can further accelerate silver's outperformance in the near-to-medium from a tactical perspective, the commodity exhibits a strong seasonality in returns with July historically being the best-performing month. Q) How should one play the small & midcap theme? Has the profitability improved compared to large caps? What does the data suggest? A) SMID profit contribution to the NSE500 universe significantly accelerated since the pandemic but peaked in March-23 at 28%. However, Mcap contribution has remained elevated at ~33% (ATH), while PAT contribution currently stands at 26%. Despite the recent correction, mid-caps and small-caps continue to trade at a significant premium to large-caps as well as their respective 7-year average multiples. Moreover, EPS estimates trajectory appears better in large-caps vs SMIDs. Heavyweight sectors in SMID such as Capital Goods and Chemicals have witnessed significant FY26E earning downgrades in CY25TD. With expensive valuations and deteriorating earnings growth, divergence appears unsustainable. We continue to prefer large-caps over SMIDs, and within large-caps prefer don't expect SMID valuation premium to sustain as the built-in growth rate is too high. However, India remains one of the fastest growing economies & over the long-term is likely to outperform EM peers. Q) Any sector that is running out of steam and investors should carefully pare their positions. A) We had been considerably OW on Banks for a long-time, but turned UW last month. Until 4QFY25, BFSI had been the primary driver of Nifty as well as NSE500 earnings growth since Jun' the trajectory appears to have changed & is expected to continue in FY26E. Large-cap Banks median PAT growth stands at-4% for least 2 of 3 key variables, loan growth, NIMs & asset quality, are less optimistic for FY26E, with pressure on NIMs evident. Banks with higher share of fixed-rate/MCLR loan portfolio will benefit and only ICICI/HDFC Bank stand out. From a tactical perspective, Bank Nifty/Nifty ratio touched +2 S.D in June'25, a level from which Banks have historically underperformed the markets in most instances over the following 6-12 months. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
11-07-2025
- Business
- Time of India
IT sector set for 2H25 comeback backed by low base, global tailwinds: Ambit Capital
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel After a muted first half, India's IT sector may be gearing up for a meaningful revival in the latter half of this edition of ETMarkets Smart Talk, Nitin Bhasin, Head of Institutional Equities at Ambit Capital , along with Bharat Arora, shares why the sector is entering a favourable zone—driven by seasonality, an uptick in global tech demand, and contrarian signals like low index weight and weak CEO duo also offers a detailed playbook for navigating FY26's volatile and concentrated market, including preferred sectors, fixed income strategy, and the rising importance of quality and low-volatility stocks in a stock-picker's market. Edited Excerpts -A) We are in the phase of rise in stock market concentration, wherein market returns are muted, and large-caps outperform mid-caps and has been the case in CY25TD wherein large-caps (8%) have outperformed mid-caps (4%) and small-caps (relatively flat), and we expect this to worsen going to be selective as FY26 is expected to be a stock-picker's market & we expect this trend to continue in FY27 as the next few months, we believe a key monitorable will be trailing market returns. Historically, moderation in returns has led to moderation in DMF equity flows, which have already halved since if markets remain at current levels, TTM returns of Nifty as well as top mid-cap & small-cap schemes are likely to remain muted/negative as base hardens, which can further exacerbate correction.A) Defensive sectors such as FMCG , Pharma and IT are the biggest OWs in our model portfolio, due outperformance in periods of rising market FMCG & Pharma have exhibited lower volatility in returns as compared to other 1HCY25, market breadth remained narrow with median stock (-0.5%) lagging the NSE500 index (5.5%) by ~6%. We expect this to continue going forward and expect CY25 to be stock-picker's earnings growth is slowing down, with Nifty FY25 earnings at ~7%, while FY26E estimate stands at ~7%, the lowest in recent times. In such an environment, Quality and Low Volatility factors outperform, which has been the case over the past year.A) Since the pandemic, India Inc. has focused on balance-sheet deleveraging instead of capex investments, which led to lower interest a result, profit margins and return ratios have significantly improved, which has led to 21% CAGR growth in BSE500 PAT over the last 5-years as compared to ~8% CAGR GDP other structural factor driving this has been shift in market share from unorganized to organized players across businesses have gained scale, pricing power, and profitability as informal competitors exited or struggled to growth in employee cost has declined from 9% in June-20 to 5% in Mar'25, which has also been a trigger for high profit growth.A) India has struggled to capitalize fully on the 'China +1 strategy' with NITI Ayog, the government's think tank admitting limited gains so has seen the biggest gains with Apple's plans for continued expansion in India (despite Trump 's threats) highlighting the country's growing foothold in the global electronic supply has also benefited Indian EMS players which have seen a lot of traction from both import substitution and exports. As China vacates lower value-added manufacturing, textiles, toys, engineering goods, and pharma stand to gain.A) Our GRIP framework (Growth, Risk premium, Inflation and Positioning) suggests a weak outlook for equities and asset allocation in favor of earnings growth slowing down (FY26E estimate is one of the lowest starting earnings growth estimates in recent times) and valuations remaining elevated, we do not expect significant outperformance of equities over risk premium is increasing due to growth slowdown, whereas reduction in inflation makes bonds more the long-term, favourable macroeconomic conditions and structural drivers like resilient domestic demand, fiscal consolidation, and global bond index inclusion should support the bond market. Should global uncertainties and geopolitical tensions abate, benign/stable inflation and lower interest rates would remain positive Nifty has considerably outperformed bonds over the last decade. While market returns can be volatile in the short-term, equities remain the best-performing asset class over a longer horizon.A) IT exhibits strong seasonality wherein bulk of returns (~17% median) are generated in 2nd half of the year (2HCY>1HCY). There has been marginal improvement in S&P500 CY25E revenue growth, which exhibits a strong correlation with tier-1 IT revenue triggers such as exposure to the Quality factor (outperforms in an earnings growth slowdown environment) & IT index weight at a 16-year low, should lead to IT outperformance in CEO confidence index is at one of the lowest level, which is a strong contrarian indicator for IT outperformance.A) Yes, we are in a stock picker's market. Earnings growth seems to be the key. Stocks with moderate by predictable earnings growth should be preferred over high growth stocks with risk to earnings a factor perspective, we prefer Quality and Low volatility stocks which have historically outperformed in an earnings growth slowdown India's structural story remains intact, we are in a cyclical slowdown at the mid-cycle. Historically, Nifty's earnings estimate trajectory used to be revised downwards each year (~8%) leading up to the financial year but earnings cuts were minimal in this cycle, which have now government is deploying counter-cyclical tools like repo-rate cuts, CRR cuts, tax relief, and fiscal spending to revive demand and boost growth.A) Elevated geo-political uncertainty led to significant rise in gold prices over the past few quarters. However, we believe that within commodities, its silver's time to Silver/Gold ratio currently trades at -1 S.D below its LTA (7-year) and we expect mean reversion to manifest & gold to underperform silver in the near-to-median industrial demand (accounts for ~50% of total silver use) is surging. Green energy policies globally are amplifying silver's role as a key industrial the supply side, mine output remains constrained due to high operational costs and lower ore grades. This supply-demand mismatch can further accelerate silver's outperformance in the near-to-medium from a tactical perspective, the commodity exhibits a strong seasonality in returns with July historically being the best-performing month.A) SMID profit contribution to the NSE500 universe significantly accelerated since the pandemic but peaked in March-23 at 28%.However, Mcap contribution has remained elevated at ~33% (ATH), while PAT contribution currently stands at 26%. Despite the recent correction, mid-caps and small-caps continue to trade at a significant premium to large-caps as well as their respective 7-year average EPS estimates trajectory appears better in large-caps vs SMIDs. Heavyweight sectors in SMID such as Capital Goods and Chemicals have witnessed significant FY26E earning downgrades in expensive valuations and deteriorating earnings growth, divergence appears unsustainable. We continue to prefer large-caps over SMIDs, and within large-caps prefer don't expect SMID valuation premium to sustain as the built-in growth rate is too high. However, India remains one of the fastest growing economies & over the long-term is likely to outperform EM peers.A) We had been considerably OW on Banks for a long-time, but turned UW last month. Until 4QFY25, BFSI had been the primary driver of Nifty as well as NSE500 earnings growth since Jun' the trajectory appears to have changed & is expected to continue in FY26E. Large-cap Banks median PAT growth stands at-4% for least 2 of 3 key variables, loan growth, NIMs & asset quality, are less optimistic for FY26E, with pressure on NIMs evident. Banks with higher share of fixed-rate/MCLR loan portfolio will benefit and only ICICI/HDFC Bank stand a tactical perspective, Bank Nifty/Nifty ratio touched +2 S.D in June'25, a level from which Banks have historically underperformed the markets in most instances over the following 6-12 months.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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Business Standard
10-07-2025
- Business
- Business Standard
Market rally boosts stocks of loss-making companies on turnaround hopes
The rally comes amid a recovery phase in markets, with SMIDs climbing back toward their September 2024 highs Mumbai Listen to This Article India's stock market rally in the last few weeks lifted not just quality stocks but also those of loss-making companies that surged as much as 64 per cent. Analysts, however, remain cautious on such a spurt and suggest investors put money in stocks of companies where there is earnings visibility amid reasonable valuations. In the NSE500 universe, 29 companies from Oil Electric to Swiggy reported losses for the quarter ended March 2025 (Q4-FY25). However, 26 of those gave a positive return so far since April 1, while 17 counters beat the returns from the benchmark Nifty50, according to data compiled
