Twelve of top 20 stocks in terms of retail investors managed to beat the BSE Sensex's 11.76 per cent return in 2024 so far, with stocks such Indian Renewable Energy Development Agency Ltd (IREDA), Suzlon Energy Ltd, Bharat Electronics Ltd (BEL), Indian Railway Finance Corporation Ltd (IRFC) and JIO Financial Services Ltd (JFS) leading gainers with up to 115 per cent returns. Stocks such as ITC Ltd, YES Bank Ltd and Reliance Industries Ltd (RIL) delivered flattish returns during this period. IDFC First Bank plunged 27 per cent, the worst among top 20 retail-heavy stocks, data compiled from corporate database ACE Equity showed.
Among top 500 listed companies, YES Bank has the highest number of retail investors at 61.56 lakh, who together own 22.44 per cent stake in the private lender. This stock is down 1.16 per cent in 2024 so far. Two Tata group stocks Tata Steel Ltd and Tata Motors Ltd, which have retail investors to the tune of 59 lakh and 56 lakh, respectively, have underperformed the BSE Sensex in 2024 so far. While Tata Steel is up 8.13 per cent, Tata Motors has risen a mere 0.7 per cent year-to-date. YES Securities is 'neutral' on Tata Steel.
"We see that the global steel prices will continue to remain under-pressure, as both the Chinese production and exports remain strong and are expected to do so thereby translating into a subdued steel prices during the quarter which would remain as a cause of concern for the primary steel producers," it noted.
Tata Motors' Q2 results were mixed. InCred Equities said "JLR’s Q2 Ebitda margin collapse of 320 bps YoY on just a 6 per cent YoY dip in net sales disappointed. Despite a superior product mix, weak average selling price, easing gross margin and rising variable marketing expenses are areas of concern.
Indian Railway Finance Corporation Ltd (IREDA) was the top performer among retail-heavy stocks, rallying 115 per cent in 2024 so far. Suzlon Energy Ltd, Bharat Electronics Ltd and IRFC gained 72 per cent, 70 per cent and 64 per cent, respectively.
Among the top 20 retail-heavy stocks, RVNL, IRFC, NHPC Ltd, NTPC Ltd, IOC, Tata Power Company, Bharat Electronics were a part of a list that Kotak Institutional Equities calls 'narrative stocks. Kotak noted that retail investors have become the largest non-promoter group in many 'narrative' stocks and believes such retail bets are based mostly on past high stock returns. There are risks for sharp corrections in such stocks in the months to come, it warned.
"Our analysis of shareholding of ‘narrative’ stocks shows a disproportionate increase in the shareholding of retail investors (percentage ownership and absolute numbers of investors). This ‘herd’ behavior reflects strong conviction stemming from past high returns from this basket of ‘riskier’ stocks. The faith may be tested by very poor returns of the past two quarters," Kotak said earlier this month.
JIO Financial Services, State Bank of India, NHPC Ltd and Tata Power Company Ltd climbed 30-45 per cent in 2024 so far. Infosys Ltd, Oil & Natural Gas Corporation Ltd, NTPC Ltd and Punjab National Bank were some other stocks that managed to beat Sensex returns this year. Indian Oil Corporation Ltd, HDFC Bank Ltd, Tata Steel Ltd and Tata Motors Ltd rose up to 9 per cent. ITC was flat.