Market Movers: Momentum stocks take a bruising as retail investors seek exit

The Nifty Alpha 50 index, a representative of top 50 momentum-based stocks, plummeted 2.6 per cent in the session as it sharply underperformed the benchmark Nifty 50 index, which fell 0.8 per cent today.

The losses were led by some of the most popular names among retail investors such as IRCTC, Deepak Nitrite, Navin Fluorine, Balrampur Chini and Dixon Technologies. The sudden selling was triggered as retail investors rushed for the door in anticipation of further losses in the market in the coming days.

It is safe to say that the momentum gravy train has slammed into a brick wall.


Jubilant Food a collateral damage

When the mood of the market turns for the worse there is not much that an individual stock can do to turn the tide. Jubilant Foodworks, another momentum stock, cracked nearly 9 per cent and became collateral damage amid the selling pressure from retail investors.

The company today reported strong earnings with only its same-store sales growth for the September quarter missing analysts’ expectations. On any other day, the earnings would have been greeted with strong gains for the stock.

However, investors are in no mood to cut corners and merely beating expectations is not enough, companies are expected to exceed expectations of the Street by unthinkable margins given that investors have already factored in the best-case scenario in the rally of the past two months.


shows the way

Jubilant Food could take note from Taj GVK Hotels on how to impress demanding investors as the company reported stellar operating performance in the September quarter.

The hotel company reported a net profit of Rs. 3.7 crore for the quarter as against a net loss of 9.3 crore in the year-ago quarter. The numbers were better than the most optimistic estimate on the Street and precluded what could be an even stronger set in the December quarter.


ITC shows resilience

After the debacle that was Tuesday when shares of ITC fell more than 6 per cent, not many would have wagered for the stock to be among the gainers in a very weak market today.

ITC ended 0.2 per cent higher in the trade as some investors looked to buy the dip in the stock following yesterday’s sharp fall. Today’s action suggests that investors aren’t willing to discount a weak run for the stock heading to the next Union Budget in February despite analysts raising the probability of another hike in cigarette taxes.


Devyani picks up cue

While Jubilant Food’s strong earnings may not have elicited the expected reaction from its own investors, it did from one of its rival’s.

Shares of Devyani International, which runs Pizza Hut and KFC franchises in India, surged over 4 per cent following Jubilant Food’s earnings on the perception that the company will most likely replicate the earnings performance.

The September quarter should yield a strong performance from the company given the reopening of the economy as well as continued traction in delivery sales.