Negative returns plague 93% of quoted companies

Written by Pradip Kumar Dey | Mumbai | Updated: Apr 9 2009, 04:02am hrs
The negative return of quoted companies during 2008-09 increased as the Sensex crossed the 9,700 mark, as compared to 2007-08.

The share of the number of companies with negative returns in the total quoted companies increased from 44.61% in 2007-08 to 93.41% during 2008-09.

On the other hand, the return of the Sensex during the 2008-09 period turned out to be negative at 37.8%, compared to a positive of 25.6% in 2007-08.

The return of BSE 500 was also negative at 42.7%, down from a positive of 29.8% during the same period a year ago.

Eighty-five major companies, which showed negative returns during 2007-08, turned out to be positive during 2008-09.

Most of these companies were from the pharmaceuticals and FMCG sectors. The companies includes Alfa Laval, Gujarat Gas, Lupin, Merck, P&G Hygine, Unichem Lab and Warren Tea.

On the other hand, 1,434 companies that showed positive returns during 2007-08 turned out to be negative during 2008-09. Many of the companies in this segment were refineries. The list includes ABB, Bhel, BPCL, Bharti Airtel, Essar Oil, Hindalco Industries, HDFC Bank and ONGC. The one year return of ONGC turned out to be negative at 22.78% during 2008-09, down from a positive of 18.46% during 2007-08.

Sashi Krishnan, CEO, Cholamandalam MF, said, "While many of the small and midcap stocks performed well last year, there was a significant correction in prices of small and madcap stocks in October 2008 and many stocks have yet to recover from the correction. This is one of the reasons for their underperformance this year." He said that the global meltdown also affected the bourses during 2008-09.

A BSE return-wise analysis of prices shows that the 50-100%, 100-500% and above 500% return groups in 2007-08 were the worst performers during 2008-09. All other ranges also showed a decline in the number of stocks during the above period.

The number of companies in the 0-25% return range decreased from 508 during 2007-08 to 80 during 2008-09. Similarly, the number of companies in the 25-50% return range dropped from 323 to 39. In the 50-100% return range, the number of companies decreased from 360 to 19.

In the return range of 100-500% and above 500%, the number of companies decreased by 93% and 88%, respectively during 2008-09 as compared to 2007-08.

Downward spiral

The share cos with negative returns was 45% in 2007-08

During 2008-09, the return of BSE 500 was negative at 42.7%

85 major cos, which showed negative returns in 2007-08, turned positive during 2008-09