Chasing market momentum has pitfalls

In the case of PSU engineering major BHEL, retail investors hiked their combined holdings by 325 basis points to 13.15 per cent from 9.9 per cent sequentially, after the stock surged some 71 per cent in the June quarter. This scrip is down 20 per cent since June 30.

Similarly, GMM Pfaudler is down 13 per cent after rallying 63 per cent in the June quarter. Retail investors had increased their stake in this company to 18.52 per cent from 15.12 per cent at the end of June quarter.

Shares of Hindustan Aeronautics have remained flat since June 30 after rallying 44 per cent during the June quarter. Retail stake in this stock rose by 249 basis points sequentially, as of September 30.

South Indian Bank saw retail holding go up by 723 basis points during the quarter. They now own 59.11 per cent stake in the lender compared with 51.88 per cent in the previous quarter. But the stock is down 14 per cent since June 30 after having risen 38 per cent in the June quarter.

These stocks, which had seen a solid rally from their March lows, have since lost steam even as BSE benchmark Sensex has risen over 5,700 points since June 30, after gaining some 5,400 point gain in June quarter.

“The overheating of stock prices meant the market was discounting a quicker return to normalcy,” say expers.

JK Paper, Mahanagar Gas, Chennai Petroleum Corporation and L&T Finance Holdings are the other stocks, which have fallen 5-23 per cent since June 30 after rallying 28-38 per cent in the June quarter.