The equity markets may be galloping, but there are several corporates that have been unable to hitch a ride, suggesting that despite a broad rally, investors have particularly strong views on some companies and sectors.
According to Hemang Raja, managing director and CEO, IL&FS Investmart, "Some of these companies have lost out on investor faith because of performance, while others have faced investor ire over management issues."
FMCG and market heavyweight Hindustan Lever, the pick of most fund managers and investors over the years, is the biggest loser of the year in terms of absolute loss in market capitalisation.
In a year when investor wealth saw record gains, Hindustan Lever saw its market capitalisation fall by Rs 13,438 crore (29.82 per cent) year on year to Rs 31,620 crore on Wednesday.
Another heavyweight, Reliance Industries, finished at number two in the losers' category, with a Rs 6,270 crore (7.84 per cent) fall in market capitalisation to Rs 73,742 crore in 2004.
The market capitalisation Dr Reddy's Labs fell Rs 4,366 crore (down 39.95 per cent) to Rs 6,562 crore, GAIL lost Rs 2,178 crore (down 9.89 per cent) to Rs 19,839 crore and i-Flex Solutions was lower by Rs 1,712 crore (down 27.08 per cent) to Rs 4,609 crore, completed the list of the top five losers.
Nimish Shah, director and chief executive officer, Parag Parikh Financial Advisory Services, says: "The stock market reacted to news and information throughout the year and stock prices reflect this. But this does not necessarily mean there is no inherent value in these companies. This is essentially true of some top performers who find themselves in the losers' category. Besides stock prices, one has to look at the company's fundamentals and long-term prospects." The upside from investors' point of view is that it is an opportunity to buy into such good scrips.
Brokers said Hindustan Lever slipped because it simply could not keep up with the competition. "Hindustan Lever spent the whole year only reacting to pricing and marketing initiatives from large and small competitors. It is not behaving like the leader of the FMCG industry," an analyst said.
Investors do not seem to have taken too kindly to the family drama in the Ambani family either, with the result that the Reliance Industries scrip ends as the year's second biggest loser in absolute terms.
Brokers said Dr Reddy's Labs hit a wall of unfortunate developments on the product side, and investors started doubting the company's ability to deliver on its aggressive promises.
The big companies with large market capitalisation have witnessed the largest fall in absolute terms, but a slightly different story unfolds if we look at relative falls.
A quick look at the losers within the universe of the BS-200 (the top 200 scrips in terms of trading volumes in the past year) indicates that Visualsoft Technologies was the biggest loser in 2004, seeing its market capitalisation fall by more than half (50.2 per cent) to Rs 255.44 crore, followed by Aptech, with a 42 per cent fall in market capitalisation to Rs 148 crore. Dr Reddy's Labs retains its third position in both the losers' lists while Hindustan Lever is No 7 in relative terms.
Among sectors with the losing streak, three commodity sectors ended up in the top ten. These include, non-ferrous metals, aluminium and petrochemicals.
The list of losing sectors is led by personal care products, which paid dearly for the price wars. The sector lost Rs 12, 472 crore (21 per cent) to end the year at Rs 47,098 crore. The petrochemicals sector follows at No 2, with a loss of Rs 948 crore (11 per cent), followed by non-ferrous metals which lost Rs 719 crore (4.6 per cent) to Rs 14,811 crore.
It has been a roller coaster year, what with the market friendly NDA government falling and the leading indices initially reacting negatively to the new Left-supported government. As a hard-boiled broker summed it up, the market takes unkindly to any unexpected change but eventually regains its composure.
