Double-dip, a reality for many stocks:: Business Line,

October , 2011:  

Despite the recent bloodbath, the market benchmark Sensex continues to trade at more than double the value at the bear market low. But do you know that there are many stocks that are trading close to or even below their 2009 price? A double-dip, as it were.

One out of every 10 stocks in the broad-based S&P CNX 500 index currently trades below the nadir it reached in March 2009. Investors appear to have been quite discerning in punishing these stocks since most of them have witnessed slowing growth or governance issues or have been crushed by debt.

THE LOSERS

Koutons Retail is the worst hit in this set, down 94 per cent from the low of Rs 350 recorded in March 2009. Companies in the retail segment faced severe pressure servicing the debt they took on for expanding outlets. The situation was exacerbated by shrinking revenues. Koutons was punished also due to the issues surrounding its promoters pledging their shares.

Other retail companies such as Celebrity Fashions and Vishal Retail that are beyond the CNX 500 basket are also trading very close to their bear-market trough.

Players in the telecommunication sector have been grappling with increased competition eating into margins and reduced subscriber addition. With profitability under stress, shares of Reliance Communications, Tata Communications and MTNL have also been pushed into this list. Reliance Communications has been further impacted by the ongoing investigations in the 2G scam and its humungous debt of over Rs 32,000 crore.

Media companies in the listed space have not had it easy over the last two years either. Scramble for advertising revenue and heightened competition have seen market shares shrink in many stocks in this segment.

FLIP SIDE

It is, therefore, no wonder that shares of New Delhi Television, TV18 Broadcasting, and TV Today have been continuously sliding.

Despite the dismal performance of these stocks, investors can take heart from the fact that almost one-fifth of the stocks in CNX 500 index are trading around 300 per cent above the March 2009 level and one third more than 200 per cent higher.

Investors in stocks such as Gitanjali Gems (up 929 per cent), Arvind Mills (769 per cent) or Bata India (651 per cent) would not even be aware that markets across the globe are in a bear grip!

GLOBAL MARKETS

A similar dichotomy is observed in global markets too. While some regions such as most of emerging Asia and the US have gained smartly and continue to trade well above their bear market bottom, benchmarks in Europe such as the Greece General Share Index, CAC, Spain Madrid General Index are close to even below the lows recorded in the first quarter of 2009.

Reasons why European stock markets have taken it on the chin are not hard to seek!