Meet the contrarians: Stocks that rallied up to 35% as Sensex crashed 3,000 pts

BSE benchmark Sensex has thus far crashed 2,904 points in 11 sessions on coronavirus scare, as stock investors globally scurried for cover amid a global risk aversion and equity meltdown.

The virus has now invaded all six habitable continents. US markets saw their worst fall in overnight trade, as local governments started preparing to contain the spread of the virus in the country. Indian indices followed suit on Friday, with Sensex tumbling over 1,100 points.

Since February 12, when Dalal Street caught the chill from the virus, the 30-share index has thus far tanked 6.98 per cent to hit a low of 38,661 on February 28.


Most of the blue chips perished in tandem with the broader indices. In last 11 sessions, the domestic benchmark indices have fallen in 10. The BSE Midcap and Smallcap indices have lost 8.19 per cent and 7.30 per cent, respectively, during this period.


Yet, 18 per cent of BSE500 stocks have taken a contrarian stand and delivered positive returns to investors between February 12 and 27. The India Cements has rallied the most at 35 per cent, after Gopikishan Damani, the brother of market veteran Radhakishan Damani, bought a 2.75 per cent stake in it, triggering a frenzy on the counter.

It was followed by Dewan Housing Finance (up 27 per cent), BASF (up 25 per cent), Suzlon Energy (up 24.67 per cent), Mishra Dhatu Nigam (up 16 per cent) and Navin Fluorine (up 16 per cent).

Stocks-specific factors mainly kept the momentum upbeat on these counters.

Navin Fluorine recently bagged a large order worth Rs 2,900 crore ($410 million) from a global company for manufacture and supply of a high performance product (HPP).

Beleaguered Suzlon Energy got a shot in the arm after its board approved a debt restructuring plan that will entail issue of fresh shares, other instruments and divestment of assets.

Max Financial Services, NLC India, Tube Investments, The Jammu & Kashmir Bank, GHCL and Garware Technical Fibres gained between 8-16 per cent on similar stock-specific triggers.

Analysts say domestic market-focus businesses are the stocks to stay with.

“Domestic market-driven opportunities will remain irrespective of whatever is happening,” said A Balasubramanian, CEO, Aditya Birla Sun Life AMC. “Liquidity has been panning out in India for last 4-5 months. Things should ultimately lead to a pickup in economic growth, though the coronavirus would have some impact. We should use this opportunity to reconstruct our portfolios,” he said.

Stocks that have taken the biggest hit in this selloff mainly include those of businesses that rely on overseas supplies. Shares of Future Consumer, Gayatri Projects, Tejas Networks, Oil India, Adani Transmission, Hathway Cable, Adani Green Energy, General Insurance of India and Intellect Design Arena slipped over 15 per cent since February 12.

The coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion, industry body PHDCCI said on Thursday.

Fresh cases of Covid-19 are now being reported outside of China with South Korea, Italy and Iran emerging as new epicenters. US officials on Wednesday warned Americans to prepare for more virus cases.

Should you buy the fall or press panic button?

Taher Badshah, CIO for Equities at Invesco Mutual Fund, and a seasoned Dalal Street investor, said one can buy the fall in these extraordinary situations.

“Our job as an investment specialist is to basically buy value, If it is available on the Street, as a result of the coronavirus, we have to act,” he said.