HNIs to Buy Stocks Hit by Covid-19
HNIs dared to buy stocks which were hit the worst by the novel coronavirus pandemic, through the nose.
Other investors of like pharma, telecom FMCG and IT have taken shelter in defense from this challenging environment. High net-worth individuals went on to buy riskier bets of casino owners, airline operators, housing finance companies, and automakers.
End of March was the beginning of the COVID 19-led lockdown. It wiped out the demand for leisure and discretionary goods and services globally. Producers of essential goods fared relatively well, and demand remained largely unaffected in that space.
This could be seen in the price patterns that showed. HNI bets failed to recover much in the recent rally, as the lockdown impacted these sectors real hard.
Stock trading reports some 16 BSE500 stocks had over 200 basis points jump in HNI stake in the March quarter. Fifteen of them were down with more than the 25 percent slide in the Sensex so far this calendar.
Daljeet Singh Kohli of Valentis Advisors said for discretionary expenditure, they will have to wait. It is too early to take a call on how people are going to behave in the post-COVID environment. This includes what will be their behavior will be like, especially towards entertainment and related consumption.
They think it will take longer to come back, Kohli added.
HNIs Hike Stakes
Data showed HNIs hiked stake in casino-owner Delta Corp by 200 basis points to 17.64 percent in March quarter. That was from 15.64 percent at the end of December quarter.
The stock has Radhakishan Damani and Rakesh Jhunjhunwala as shareholders. It has fallen 66 percent year-to-date in the stock market.
Damani cut his stake in this company to 1.17 percent from 1.32 percent sequentially. Jhunjhunwala and his wife Rekha held on to their 7.38 percent stake during the quarter.
Aviation firm SpiceJet saw the HNIs hike stake by 235 basis points to 13.67 percent in March quarter. That was from 11.32 percent in the December quarter.
For nearly two months, the airline has been grounded, failing to benefit from the recent drop in crude oil prices. The stock was down 64 percent year to date.
They hiked stake in NCC by 554 basis points to 21.59 percent in March quarter. That was from 16.05 percent QoQ.
Raising Stakes
They increased stakes in real estate lenders Indiabulls Housing, GIC Housing Finance, and DHFLNSE. That was -1.30 % by 238-554 basis points, sequentially. These stocks are now down up to 60% year to date.
HNIs also raised a stake in Tata Motors by 289 basis points to 12.86 percent from 9.97 percent QoQ. Moreover, Moody’s Investors Service has placed Tata Motors’ ratings under review for a possible downgrade.
Fitch recently downgraded the long-term issuer default rating of the company to ‘B’ from ‘BB-‘ with a negative outlook.
Rajat Rajgarhia, CEO of MOSL said right now, they are hearing more of layoffs and job cuts. And that is what is dominating media headlines. Whenever they have an environment like this, they cannot be very positive on the consumption side.
People would possibly not be in a hurry to spend again, said Unmesh Kulkarni of Julius Baer India. Primarily because of either loss of income or job, the weak mood will prevail for some time, he added.
Ujjivan Finance, South India Bank, Reliance Power, GHCL, and Care Ratings are some of the other battered stocks amid COVID-19. These had over 200 basis points rise in HNI holding in March quarter.
