Over 300 stocks have hit 52-week lows amid a downward trend in the market this month.
Prominent names to have hit the 52-week lows include Wipro, Nestle India, Hindustan Zinc, Dabur, SAIL, Hindustan Copper, ICICI Securities, Amara Raja Batteries, Bajaj Electricals, RBL Bank and PNB Housing Finance. Asset managers HDFC Asset Management, Nippon India Asset Management and Aditya Birla Sun Life AMC were among those that hit lows.
New-age tech companies that listed on the bourses have also been struggling. Zomato hit a 52-week low of Rs 50 on Tuesday, while One 97 Communications, the parent of Paytm, fell to Rs 518 apiece on Wednesday. Macquarie Research had set a fair price of Rs 450 on Paytm in March, citing low probability of getting a small finance bank license and headwinds on the regulatory front. Jefferies had set a revised price target of Rs120 in February for Zomato, while cutting the target multiples for delivery business reflecting the derating in global peers and weak 3Q trends.
Analysts believe that investors should look at stocks that hit 52-week lows only if they have a dividend paying track record, are debt-free and have sound fundamentals.
“Global headwinds are currently weighing on the sentiment and the domestic factors are also not very encouraging. The fresh selling pressure in the banking pack is further adding to the negativity. We thus reiterate our negative view and suggest continuing with the “sell on the rise” approach. Since most sectors are reeling under pressure, participants should align their positions accordingly and avoid contrarian bets,” said Ajit Mishra, VP – Research, Religare Broking.
Nifty opened higher on back positive global cues. However, index gave up all its intraday gains and ended the day with minor loss of 26 points at 15,782 levels. Global markets witnessed some relief rally after relentless selling in the last few days as investors took some comfort from US Federal Reserve Chairman Jerome Powell’s comments suggesting that it is not actively considering an aggressive (75bps) interest-rate hike.
Retail inflation in April jumped to an 8-year high of 7.8 per cent, thus raising bets of aggressive rate hikes by the RBI. Other macro data too were not supportive with IIP growth in Mar’22 at just 1.9 per cent and the trade deficit in April 2022 widened to $20.11 billion.
“The expected rate hike cycle continues to remain a key overhang for equity markets globally. Also relentless FII selling in the domestic market has added to the overall downtrend. Nifty is struggling to cross 16,000 zones with selling emerging at higher levels. While the markets are oversold, we expect both volatility and weakness to continue next week as well given the weak global cues. Also continuous FII selling in Index heavyweights could limit upside on any possible bounce,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.