The unprecedented rally in the Indian equity market has spawned as many as 50 new entrants into the billion dollar club in 2014 by way of market capitalisation, data compiled from Bloomberg showed.
The rise in the number of companies with one billion-dollar of market cap has been nearly ten times compared to six such companies last year, when the Sensex yielded a 9% return and the value of rupee depreciated by 11% against the US dollar, data showed.
In contrast, the Sensex has yielded 28.7% returns this calendar and rupee’s fall against the dollar was restricted to just 2.8% to 63.50 levels.
Ashok Leyland tops the list in market-cap gainers. The market value of country’s second-largest truck maker increased $1.48 billion or nearly three-times from 2013 to $2.22 billion.
TVS Motor (up $1.31 billion to $1.90 billion), Amara Raja Batteries (up $1.21 billion to $2.14 billion), Page Industries (up $1.2 billion to $2.13), and NBCC (up $1.17 billion to $1.47 billion) complete the list of top five gainers.
Automobiles and auto-ancillaries companies, with banking and financial services firms comprise a third in the list of these 50 companies.
Experts said that investors inclined towards the stocks of these sectors in anticipation that improvement in consumer sentiment would give a boost their earnings growth.
“Improving GDP should drive faster income growth, which should boost discretionary consumption. Auto ownership costs are declining driven by lower taxes and falling fuel prices, and should ease further in 2015 when interest rates are likely to be cut. We see India’s passenger vehicle (PV) industry growth improving from 6% this financial year to 15% next,” said Abhijeet Naik, analyst, CLSA.
To highlight, Ashok Leyland reported a sharp turnaround in the second quarter of the FY15 with a net profit of Rs 120.69 crore. The Chennai-based company had posted a loss of R25.05 crore in the corresponding period last fiscal.
For Alstom T&D India, the company’s net profit surged 70.69% year-on-year in September quarter to R35.52 crore.
The jump in stock value also extends to consumer durables companies. Air-cooler manufacturer Symphony gained 341% on the exchanges this year, the most in BSE Consumer durable index, taking the total value of its shares to $1.03 billion from $240 million last year.
Similarly, Whirlpool India’s market value almost tripled to $1.25 billion from last year. With over 60% gains in 2014, BSE Consumer Durable index may emerge as the second best performer among BSE sectoral index after Bankex.
Experts continue to hold a positive view for Indian equities and say that Indian markets are relatively better placed compared to peers as economic fundamentals may show further improvement, leading to an upbeat economic as well as stock market outlook.
“(The) NDA government has been proactive… From being amongst the least preferred markets more than a year ago, India is now amongst the most preferred markets to invest in, in our view. Economy is on recovery path and consensus estimates of ~19-20% earnings growth driven by ~14% revenue growth do not appear aggressive,” said Rakesh Arora, MD and head of research, Macquarie Capital Securities (India). Arora said that infrastructure sector will be the main theme for next year. The key focus areas would be roads, railways and fuel availability for power in the near term. “Lowering inflation and curtailing fiscal deficit are other focus areas and should benefit Banks, Capital Goods and Autos,” Arora said.
Even as a large part of the markets continued to benefit from the Narendra Modi-led rally in the stock markets, some firms dropped out of the billion dollar club. Names include Bhushan Steel and Jaiprakash Associates, data showed. Bhushan Steel’s market cap declined $1.45 billion to $310 million this year, whereas Jaiprakash Associates’ value on the bourses fell nearly one billion dollars.