Recap FY24 - Best large cap stocks on Dalal Street

4 Apr 2024 , 12:12 PM

NIFTY RETURNS IN FY24 FLATTERED THE STREET AT 30.71%

To say the least, FY24 was an alluring year for the Nifty. It gained a good 30.71% in the year yoy, which is much better than any other asset class. The Nifty closed the year at 22,327, just about 0.89% away from its 52-week high levels. During the year, the Nifty made a low of 17,205 and a high of 22,527. In short, the Nifty closed tantalizingly close to its lifetime highs, which itself says a lot of the inherent strength of the Nifty. However, it was not just the large cap indices, but even the mid-cap and the small cap indices did extremely well in the year FY24, with gains progressively higher for the mid-caps and the small caps respectively. There were several factors that buoyed the Nifty in the fiscal year FY24.

For the fiscal year FY24, the FPI flows overall stood at $41.04 Billion. That is the second best FPI flows in any fiscal year since we saw inflows of $45.7 Billion in the year FY15. Out of the total FPI inflows of $41.04 Billion in FY24, equity market inflows from FPIs accounted for $25.27 Billion while the rest came from debt flows and hybrid flows in the year. But the real story of FY24 was the impelling macros. Inflation stayed under control at an average of 5.4% for FY24 while GDP growth stands at over 8% as of the end of Q3. The full year GDP is estimated to grow at around 8%. More importantly, the current account deficit (CAD) stands at just 1.2% of GDP as of Q3FY24 and is likely to fall to under 1% for FY24 overall. In short, a compelling macro story built up for India in FY24, and that was reflected in Nifty returns.

LET US START WITH THE MOMENTUM 1-MONTH RETURNS

Although this is a look at FY24, it helps to look at the momentum returns first. For the month of March 2024, Nifty index as a whole was up 1.71%. Out of the 50 stocks in the Nifty 50 index, 32 stocks gave positive returns and 18 gave negative returns in March 2024.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
MARUTI	12,607.00	12.98%	51.90%	12,726.80	8,140.00	54.88%	0.95%
BAJAJ-AUTO	9,107.35	11.72%	135.82%	9,287.80	3,769.55	141.60%	1.98%
BAJFINANCE	7,235.05	11.49%	28.80%	8,192.00	5,522.70	31.01%	13.23%
HINDALCO	561.85	11.07%	40.40%	620.50	389.90	44.10%	10.44%
TATASTEEL	156.20	10.73%	50.43%	159.15	101.65	53.66%	1.89%
HDFCLIFE	632.50	9.09%	27.70%	710.60	486.70	29.96%	12.35%
BHARTIARTL	1,236.00	8.85%	65.22%	1,245.00	738.85	67.29%	0.73%
LT	3,764.90	8.46%	75.27%	3,813.35	2,121.00	77.51%	1.29%
HEROMOTOCO	4,730.00	7.94%	104.95%	4,949.05	2,246.00	110.60%	4.63%
INDUSINDBK	1,549.75	7.16%	46.91%	1,694.50	1,007.20	53.87%	9.34%

Data Source: NSE

What are the sectors that are showing momentum over the last one month. The momentum clearly appears to be in favour of the auto, financials, and metal stocks. Out of the top 10 stocks by 1-month returns, 3 are healthcare stocks, 3 are auto stocks and 2 are metal stocks. Tata Like in the previous month, Larsen & Toubro and Bharti Airtel continued to show smart gains and again appeared in the top-10 on monthly returns. The momentum is clearly in their favour.

What about the laggards in the Nifty on one-month returns? The bottom 10 on monthly returns are dominated by IT stocks, with 6 of the laggards for March 2024 belonging to the IT sector. The momentum was clearly negative for the IT sector in the month, especially after Accenture downgraded its constant currency revenue growth guidance for 2024. The top 10 stocks gave an average monthly return of 9.95% for March 2024.

BEST AND WORST STOCK RETURNS IN FY24 – NIFTY STOCKS

For a more fundamental perspective, we turn to the full year returns of FY24 and the best and worst performers for the fiscal year. Nifty index generated annual returns of 30.71%. Out of the 50 stocks in the Nifty 50 index, 48 stocks gave positive returns and only 2 stocks gave negative returns in FY24.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
TATAMOTORS	995.00	3.63%	142.62%	1,065.60	400.45	148.47%	7.10%
BAJAJ-AUTO	9,107.35	11.72%	135.82%	9,287.80	3,769.55	141.60%	1.98%
ADANIPORTS	1,342.95	3.26%	110.77%	1,358.70	571.55	134.97%	1.17%
HEROMOTOCO	4,730.00	7.94%	104.95%	4,949.05	2,246.00	110.60%	4.63%
COALINDIA	433.95	-0.02%	103.85%	487.60	208.40	108.23%	12.36%
NTPC	337.20	0.75%	92.99%	359.95	166.80	102.16%	6.75%
SHRIRAMFIN	2,360.00	0.47%	88.51%	2,535.00	1,202.15	96.31%	7.42%
ADANIENT	3,197.00	-0.68%	83.70%	3,350.00	1,573.00	103.24%	4.79%
ONGC	268.50	0.87%	79.48%	284.95	146.50	83.28%	6.13%
BPCL	604.00	-1.13%	77.25%	687.95	327.00	84.71%	13.90%

Data Source: NSE

What are the sectors that emerged leaders in FY24? The momentum was with auto stocks with Tata Motors, Bajaj Auto, and Hero Motocorp in the top 10 annual returns list. The other sector that saw a good representation was the minerals space with Coal India, ONGC and BPCL also featuring in the top-10 stocks by returns. space. As a theme, there were 4 PSUs, with NTPC being the other top performer apart from the 3 PSU mineral companies. Based on annual returns, 5 stocks generated more than 100%, while 19 stocks generated more than 50% returns. A total of 31 of the 50 Nifty companies actually outperformed the Nifty index returns; doing better than the benchmark.

How about the laggards on a 1-year basis. There were 2 stocks that gave negative returns for FY24 viz. HDFC Bank and Hindustan Unilever. For HDFC Bank, it was more an overhang of the merger with HDFC Ltd, which is likely to keep margins and NIMs under pressure. For Hindustan Unilever, it is a double whammy of rising crude oil prices and weak rural sales. Among the other stocks that generate single-digit returns for FY24 were Infosys, LTIM, Kotak Bank and Asian Paints. However, not all was lost for FMCG stocks; with Nestle India, Titan, and Tata Consumer featuring in the top-20 in terms of 1-year returns for FY24.

HOW RESILIENT WERE THE NIFTY STOCKS IN FY24?

How do we measure resilience of a stock. One way to measure resilience is to look at the extent of bounce in the stock from 52-week lows. Here we will rank the stocks on how much the Nifty stocks bounced from their respective lows of the year. For Nifty, as a whole, the bounce from the low of the year was 29.77%. Out of the 50 stocks in the Nifty 50 index, 7 stocks bounced more than 100% from the lows, while 23 stocks bounced more than 50% from the lows and a total of 36 stocks showed more resilience than the Nifty index.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
TATAMOTORS	995.00	3.63%	142.62%	1,065.60	400.45	148.47%	7.10%
BAJAJ-AUTO	9,107.35	11.72%	135.82%	9,287.80	3,769.55	141.60%	1.98%
ADANIPORTS	1,342.95	3.26%	110.77%	1,358.70	571.55	134.97%	1.17%
HEROMOTOCO	4,730.00	7.94%	104.95%	4,949.05	2,246.00	110.60%	4.63%
COALINDIA	433.95	-0.02%	103.85%	487.60	208.40	108.23%	12.36%
ADANIENT	3,197.00	-0.68%	83.70%	3,350.00	1,573.00	103.24%	4.79%
NTPC	337.20	0.75%	92.99%	359.95	166.80	102.16%	6.75%
SHRIRAMFIN	2,360.00	0.47%	88.51%	2,535.00	1,202.15	96.31%	7.42%
BPCL	604.00	-1.13%	77.25%	687.95	327.00	84.71%	13.90%
ONGC	268.50	0.87%	79.48%	284.95	146.50	83.28%	6.13%

Data Source: NSE

What are the sectors that are showing resilience from the 52-week lows. It is once again the auto stocks that have dominated along with the mineral stocks and PSUs as a theme overall. The two stocks at the top in terms of resilience were Tata Motors and Bajaj Auto. Adani Enterprises, the holding and incubating company of the Adani group, also appeared in the top-10 resilience list, as it bounced sharply post the Hindenburg crisis. The government policy to open up a more critical role for PSUs, appears to be paying off as higher returns.

What is the story of the laggards in the Nifty in terms of the lowest bounce from the 52-week lows? There were 4 stocks that have bounced less than 10% from the lows of the year. That means, they are still very close to their lows and that is a sign of weakness at a time when the Nifty and the Sensex are at lifetime highs. Among the laggards, Kotak Bank, HDFC Bank, Hindustan Unilever, and Asian Paints. That is not surprising as these are also the stocks that kept the Nifty’s journey under stress during the year. The broad story is that autos and PSU stocks triggered the bounce in the Nifty while select banks and FMCG stocks moderated the returns on the Nifty for FY24.

SWING STORY – HOW CLOSE ARE NIFTY STOCKS TO YEARLY HIGHS?

Let us finally look at the top ranked swing stocks for the year, wherein we use the proximity to the 52-week high as the proxy. The closer the stock is to its 52-week high, the higher is the swing factor. In fact, the Nifty index itself is just about 0.89% short of the 52-week high. Out of the 50 stocks in the Nifty 50 index, 17 stocks are less than 5% away from their 52-week highs, while a total of 33 stocks are less than 10% away from their 52-week high levels.

Stock Symbol	Market Price	1-Month Return	1-Year Return	52-week High	52-week Low	Bounce from Low	Distance to High
GRASIM	2,305.00	4.63%	40.18%	2,309.20	1,601.60	43.92%	0.18%
SUNPHARMA	1,627.00	2.97%	63.38%	1,634.00	922.45	76.38%	0.43%
BHARTIARTL	1,236.00	8.85%	65.22%	1,245.00	738.85	67.29%	0.73%
MARUTI	12,607.00	12.98%	51.90%	12,726.80	8,140.00	54.88%	0.95%
ADANIPORTS	1,342.95	3.26%	110.77%	1,358.70	571.55	134.97%	1.17%
LT	3,764.90	8.46%	75.27%	3,813.35	2,121.00	77.51%	1.29%
CIPLA	1,496.00	1.35%	68.63%	1,519.00	885.35	68.97%	1.54%
ICICIBANK	1,096.05	4.50%	28.47%	1,113.55	848.00	29.25%	1.60%
RELIANCE	2,970.30	2.08%	32.98%	3,024.90	2,211.10	34.34%	1.84%
TATASTEEL	156.20	10.73%	50.43%	159.15	101.65	53.66%	1.89%

Data Source: NSE

What are the sectors that are showing the best swing in terms of proximity to their 52-week highs. Interestingly, you don’t find auto companies or PSU companies in the top list, showing that the late correction in March 2024 amidst tax farming, led to a lot of volatility based correction in the auto and PSU companies. Grasim, Sun Pharma and Bharti Airtel top this list of stocks that have the best swing in their favour and are closest to their 52-week highs. Other heavyweights like Reliance and ICICI Bank have also found a place in this list. Maruti may not be a star performer, but amidst low volatility, it is close to its yearly highs.

What is the story of the laggards in the Nifty in terms of proximity to the 52-week highs. The story, once again, reads like a very familiar script. The stocks that are still more than 20% away from the highs include HDFC Bank, Hindustan Unilever, Asian Paints and LTIM. Both HDFC Bank and LTIM are suffering the aftermath of a mega merger and are yet to come to terms with the adjustments. In the case of HUL and Asian paints, it seems to be more a combination of weak rural demand and the risk of higher crude oil prices.

WHICH NIFTY OUTPERFORMERS SHOWED CONVICTION?

One way to check the conviction of outperformance, is to look at the stocks that outperform on multiple parameters. Here we looking at momentum in term of 1-month returns, fundamentals in terms of 1-year returns, resilience in terms of bounce from lows and swing in terms of proximity to the highs. Here is what we are reading from the data.

• Two wheeler stocks showed the best conviction with Bajaj Auto and Hero Motocorp appearing in the top-10 in all three lists. That is relatively high conviction and largely predicated on high demand and expectations of interest rate cuts.
• Then there are the stocks like PSU oil stocks, Coal India, Larsen & Toubro, and Tata Steel which appear in 2 out of the 4 lists showing relatively high conviction levels. They have shown consistency in performance through the year.
• Finally, there are stocks like HDFC Bank, Hindustan Unilever, Asian Paints etc, which have applied pressure on the Nifty performance.

In a nutshell, FY24 was a flattering year for Indian equity large caps. Interestingly, this comes in the midst of a period when most global economies have been struggling.