As benchmark indices head for the worst yearly performance for the first time since 2011, some of the index constituents have fared even worse as regulatory issues and policy changes prompted investors to partially exist these stocks, reports Yoosef KP in Mumbai. Four BSE100 constituents – Nestle India, ITC, Sun Pharma and Bosch – are poised to end the year with negative returns for the first time in seven years.
Although consumption-led stocks have withered the slowdown in volume growth by reporting healthy earnings, increased levies and regulatory issues have impacted the performance of ITC, Nestle India and Sun Pharma in 2015. Between 2009 and 2014, these four stocks had given an average return over 28% — Sun Pharma topped the list with 42% return. Sensex yielded an average return of 23% during the same period.
Shares of ITC remained under pressure from the beginning of the year, after the government announced hike of 15%-25% on cigarettes. As the quarterly revenue growth turned flattish to negative this fiscal, the ITC stock has lost more than 11% of its value in 2015.
Nestle India also had an ominous year as the Food Safety and Standards Authority of India, banned sale of Maggi noodle in several markets. The instant noodle brand that accounts for nearly a third of the company’s revenue was taken off market in mid-June. The impact was visible in the financials with the company reporting Rs 64 crore of loss during three months to June 2015.
Sun Pharma lost close to 2% of its value this year, although pharmaceuticals continues to be one of the better performing industries in terms of market returns. Losses stemming from Ranbaxy, the pharma company it acquired last year, as well as US import bans on five of its facilities weighed on the company’s performance.
Bosch, which was inducted in Nifty Index late May, has lost nearly a third of its market value since August.