While 70% of stocks in the BSE Sensex, BSE Midcap, and BSE Smallcap indices delivered positive returns in 2024, 325 stocks struggled to stay afloat. Several notable companies experienced significant losses:
Major Decliners in the BSE Smallcap Index
| Stock | YTD Decline (%) |
|---|---|
| Fusion Micro Finance | 68% |
| Spandana Sphoorty Financial | 67% |
| Filatex Fashions | 67% |
| HMA Agro Industries | 51% |
| GVK Power & Infrastructure | 50% |
| Kamdhenu Ventures | 48% |
| India Pesticides | 47% |
Despite these setbacks, the BSE Smallcap Index gained 33.5% YTD, reflecting the broader market’s resilience.
Midcap Struggles:
While the BSE Midcap Index rose 30% YTD, several companies underperformed:
- Zee Entertainment Enterprises: Down 52%.
- Aarti Industries, Bandhan Bank, Relaxo Footwears: Declined over 25%.
Reasons Behind the Declines
1. Market Volatility:
2024 saw increased market turbulence, particularly from October onward, driven by:
- Global economic weaknesses.
- Geopolitical tensions.
- High valuations and domestic elections.
2. FPI Outflows:
Foreign Portfolio Investors (FPIs), who purchased ₹93,000 crore worth of equities until September, offloaded ₹1.10 lakh crore in October and November, creating downward pressure.
3. Sectoral Weaknesses:
- Banks and Utilities were among the worst-performing sectors.
- Specific companies, such as IndusInd Bank and Asian Paints, faced challenges despite broader market gains.
Analysts’ Predictions for 2025
Promising Sectors:
- Large-Caps Over Small- and Mid-Caps:
HSBC prefers large-cap stocks due to their attractive valuations and strong earnings profiles. - Domestic-Driven Opportunities:
HSBC highlights India and ASEAN markets for their demographic advantages, rising middle-class consumers, and technological growth.
Market Trends:
- Earnings Momentum:
According to JM Morgan Asset Management, India will maintain robust earnings due to falling interest rates and growing services exports. - Long-Term Stability:
Domestic investments remain strong, which may provide a floor during market corrections.
Opportunities Amid Declines
“Friendshoring” and Manufacturing Growth:
India’s potential as a leading destination for “friendshoring” in EM Asia could attract significant foreign direct investments, boosting growth in:
- Manufacturing
- Infrastructure Development
Sectoral Winners:
- Real Estate: Best-performing sector in 2024.
- Capital Goods and IT: Consistent strong performers.
Investor Takeaways for 2025
- Focus on Large-Cap Stocks: Analysts favor large caps for their stability and earnings visibility.
- Identify Sectoral Trends: Emerging sectors like manufacturing and technology could drive growth.
- Prepare for Volatility: Despite long-term prospects, short-term corrections may persist due to high valuations and global economic uncertainties.
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