With the economy in doldrums and indicators of economic performance like employment, GDP, consumer price index (inflation) up for a toss, how is the stock market seeing record breaking growth?
In our previous articles we have talked in details about the various coronavirus specific industries which are seeing exponential growth, that is easy to understand. The questions for other similar high performance stocks however is a bit more complex. With that being said, let’s get into our highest performing stock over the last financial quarter-
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1. Reliance Industries (RIL) : SENSEX
RIL has been the subject of this stock market rally which has seen nothing but incremental growth since early April. While other companies faced a general neglect from the investors, RIL saw three notably high profile equity deals. Vista Equity Partners announced on early May an investment of Rs 5665 Crores in Jio Platform while a PE firm announced buying a 2.32 % stake in Jio Platforms for Rs. 11,367 Crore and most famously, Facebook on 22nd April announced to buy a 9.9% stake in Jio Platforms amounting to a $ 5.7 Billion investment. All this has resulted in Jio Platforms raising more than Rs. 60,500 Crore in a month. With chairman Mukesh Ambani’s vision to make Reliance a debt-free company by March 2021, investors are lining up to take a piece of the action.
2. Cipla Ltd. : NIFTY50
Quarter end of March 2020 saw erudite investors such as Rakesh Jhunjhunwala increasing their stakes in Corona specific industries, and in case of Cipla and it’s partner company Jubilant Life the investments went up by 4 % after signing a non-exclusive licensing agreement with Gilead Sciences, Inc for the manufacturing and distribution of the experimental drug Remdesivir which has been issued an Emergence Use Authorisation by the US FDA as a possible treatment for Coronavirus. The deal includes Cipla’s rights to market the product under it’s brand name in 127 countries including India and South Africa. Two of Cipla’s biggest markets. All of this resulting in record high in capital appreciation upwards of 50% over the last three months.
3. Vodafone-Idea : BSE100
Vodafone-Idea soared all time high earlier this month following Google’s parent company Alphabet Inc’s interest to acquire 5% stake in the telecom company. The volumes being traded were clear indicators of heightened interest in the stock by general investors. Furthermore, systemic cash injection from it’s parent’s company Axiata Group saw a 15% zoom while SC’s decision to extend AGR payment deadlines caused further rallying. All things considered, this is also the largest telecom network in India.
4. Industrial Development Bank of India (IDBI) : NIFTY200
In a positive turn of events, earlier this month IDBI rallied upwards of 20% reaching its highest trading permissible limits for the day. This development came after the bank posted a profit of Rs. 135 Crores in the last quarter. The bank, largely owned by LIC has also reported sharp decline in its NPAs in the last quarter. All of this to the stock zooming 89% over the period of 1st week of June. This rally in the private sector bank has seen IDBI Bank climbing the ladder to become the sixth most valued listed lender surpassing Bandhan Bank, YES Bank, and IndusInd Bank in market capitalisation ranking in the corresponding week.
5. TATA Communications Ltd. : BSE100
TATA Communications is emerging in the telecom business rivalling Jio Platform in a bid to debut the much coveted and rapidly emerging 5G technology among other developments. This fresh 52-week high comes after announcing the project of building a submarine high-capacity cable connecting the South-China sea region countries. Furthermore, TATA Communications’ board has recommended a final dividend of 40% which is massive step up and amounts to over Rs. 4 per share. Amidst the massive market instability we will continue noticing investors leaning towards largecaps like TATA more and more.
6. Opto Circuits Ltd. : SENSEX
The growing importance of corona specific industries cannot be overstated. Opto Circuits has been in the business of manufacturing medical devices since 1992 and on late may announced it’s proposal to invest in R&D for development of certain products for domestic and global market to aid the covid-19 efforts. With a stock rally upwards of 500% in a matter of weeks, it goes on to show the imminence of such easily overlooked companies.
What to make of these reports.
It is to be considered that no matter the imminent surge in a company’s stock prices, it can never be an indicator of its true performance over a long term period which really does matter.
As an investor you should not just look at charts but take into consideration the long term plans of the company and whether you understand the tangent of that industry in complete and concrete details. That being said, we urge you to do your own research before investing as this is just a brief list and an academic effort only.