New Delhi, April 22: The betting game on the bourses is already producing a windfall for contrarians who have yet again been rewarded for their courage to bet in an uncertain situation. Top gainers in the 1000-point rally in the past month have been the stocks which were written off by the market and were hammered down to their decade lows in late February. Not only have these stocks outperformed the BSE's 30-share index by many times, they have risen much faster than most of the bluechips like Reliance Industries, ACC, Tisco, Castrol, Hindustan Lever, ITC, Bajaj Auto and State Bank of India.At least 17 scrips from the Mumbai Stock Exchange's (BSE) group A touched their ten year lows in February this year. In just over a month, they have registered phenomenal gains ranging from 50 per cent to as high as 300 per cent.
In late Feburary, political uncertainty and election fever had gripped the markets. The aftermath of the South-Asian crisis was also slightly felt by the Indian markets. And to top it all,foreign institutional investors were reluctant to extend their commitment to the Indian stocks. On the positive side, encouraging results from multinational companies were pouring in and the merger and acquisition game had just begun. At that time, FE Investor had identified these stocks as investment bets/takeover targets. Apart from hitting new lows, these stocks were quoting at a steep discount to their book values and asset per share.
Stocks of these 17 companies bounced back smartly and have outperformed the sensex. Scrips like Videocon International, Voltas, Garware Polyester, Ballarpur Industries, Ceat Limited, ITC Bhadrachalam, Crompton Greaves, Apollo Tyres, Godrej Soaps and Sterilte among others touched their decade lows in February. Smart investors who had picked up these stocks can today reap a gain of over 100 per cent.
Videocon International has zoomed by 273 per cent from Rs 26 to Rs 97. Videocon International has a strong book value of Rs 197 and an asset per share of around Rs 94.Videcon's scrip at Rs 96 still trades at a steep discount to its book value. Voltas' scrip in a short span moved up from Rs 20 to Rs 60. Among the other major gainers, Raymond Limited, Garware Polyester and Nagarjuna Fertilisers have shown gains of over 130 per cent.
Even after the phenomenal rise in their values, scrips like Garware Polyester, Ballarpur Industries, Videocon International, Essar Steel, Gujarat Alkalies and ITC Bhadrachalam are still quoting well below their book value and asset per share.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
