While headline indices have been hitting new lifetime highs, around 40 constituents of the BSE 500 index have hit 52-week lows since the beginning of the current financial year, data sourced from Capitaline revealed. Some of these shares are very large-cap companies, including Sensex constituents. Coal India, for instance, hit a fresh 52-week low on May 30 after having corrected over 10% since the beginning of April. The company had reported a 38% (y-o-y) drop in its Q4FY17 net profit on the back of higher employee expense and higher provisions on account of grade slippages. The dominant sector on this list is pharmaceuticals with the shares of as many as 16 pharma companies, led by Dr. Reddy’s, Lupin and Sun Pharmaceuticals, hitting their respective 52-week lows during this period. Pharma stocks are under pressure due to a combination of domestic as well as problems in the international market. In the domestic market, national pharmaceutical pricing policy has come in which has negatively impacted their sales. The policy decides what is the maximum retail price a company can keep for its products.
In an earlier note to investors last month, Credit Suisse said it expects price erosion to increase further due to higher competition from increasing FDA approvals, increasing channel consolidation and increasing approvals of new entrants. Stocks like Videocon and Reliance Communications which have been weighed by high debts also hit their 52-week lows during this period. Videocon has reported losses in the last five consecutive quarters. For the quarter ended December 2016, the company posted a loss of Rs 509 crore against a loss of Rs 84 during the same period in the previous year. The company had a total debt of Rs 47,554 core as of December 2015. Around 99.26% of the promoter holding in the company is pledged.
For the quarter ended December 2016, the company posted a loss of Rs 509 crore against a loss of Rs 84 during the same period in the previous year. The company had a total debt of Rs 47,554 core as of December 2015. Around 99.26% of the promoter holding in the company is pledged.
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Reliance Communications has been under pressure due to increased competition in the telecom sector and concerns about the company’s ability to repay its debts.The entry of Reliance Jio, a wholly owned subsidiary of Reliance Industries, last year has weakened the financials of companies across the sector. The company is banking on two crucial deals with Brookfield and Aircel to reduce its debt.
Last week Anil Ambani, chairman of Reliance Communications, said in a press conference that Reliance Communications has got a seven-month reprieve from its lenders to service its debt.