2018: Nightmare on Dalal Street (ends!)

2018 was by far one of the most challenging years for stock pickers, equity advisors and  fund managers alike.  The year was agog with issues including international macros moving sharply in adverse directions, a whole host of international issues with China at the center,  apart from of course our own local regulations changing to a new regime.

We at the Prabhudas Lilladher blog desk have written about this phenomenon in earlier posts (https://www.plindia.com/blog/the-midcap-mayhem-is-it-close-to-ending) – where the Index is strong but no one made money – but decided to have a relook at the data from earlier years to put 2018 in perspective.

And indeed it does look like this year was like none before!

Profile of Performance of NSE Listed Stock Universe
% of Listed Stocks ( January to January)
Returns 2016-17 2017-18 2018-19
< -30% Returns 20% 8% 58%
< 0% Returns 42% 16% 86%
> 30% Returns 11% 16% 3%
Average Stock Return -3% 36% -31%
Median Stock Return -5% 56% -35%
Nifty Return 7% 28% -1%

Highlights from Data

  • The year 2016-17 seems to have not done much with Nifty generating a return of 7%. However, the market seemed symmetrical and fair – 42% of the stocks delivered negative returns and 58% positive – and while the average stock was in loss, there were no sharp extremes – only 20% were badly hit and 11% delivered very well.
  • The next year was the year of the bulls – virtually everything did very well and 84% of the stock universe delivered positive returns. The median stock return was 56% meaning that anything and everything ran up.
  • Then came the nightmare. Versus 2017-18 where 84% of the universe delivered positive returns, 86% of the  stock universe delivered negative returns! And as if a reversal, the average stock lost 31% in 2018-19 versus a gain of 36% in the year before!
  • Overall the index didnt do too much like a repeat of 2016-17- but the tail was fatter and uglier- in 2016-17 only 20% of the stocks lost more than 30% while this year the number was closer to 60%!

No wonder then that portfolios bled and one would be lucky to find anyone who made money with longer term investments during the year. In fact, data shows that virtually all the “Large and Midcap” category funds (where fund managers need to pick from a broader market and therefore a true reflection  of the market challenge) ended the year with a loss and an average fund in this category delivered a negative return of 8%. Some well known names in  this category lost much more.

Fund 1-Year Return
Reliance Vision Fund -18.52
BOI AXA Large & Mid Cap Equity Fund – Regular Plan -18.07
L&T Large and Midcap Fund -14.37
Aditya Birla Sun Life Equity Advantage Fund – Regular Plan -14.33
Principal Emerging Bluechip Fund -12.91

Our own Equity Research Product, Investactive (http://www.plinvestactive.com) lost about 13% during the year despite having  some of the best names in the listed space in the portfolio.

Each portfolio was hit – whether you had the best of NBFCs, or the best of Superstar Stocks or cyclicals – eventually no one came out a winner!

One thing rang true all over again – Markets are a great leveller! Remember Ozymandias : “My name is Ozymandias, king of kings:Look on my works, ye Mighty, and despair!”.

What Lies Ahead

We are optimistic about the year ahead especially given the carnage of the previous year and the views are captured at a recent media interview (https://economictimes.indiatimes.com/markets/expert-view/outlook-for-2019-is-much-better-than-that-of-2018-amisha-vora-prabhudas-lilladher/articleshow/67335879.cms)

Our PMS portfolios (https://www.plindia.com/portfolio_management.aspx) and of course our Equity Research Product, Investactive, are positioned as curated and stable advice for your portfolio. So do remain in touch with us at advisory@plindia.com or leave us a whatsapp message at 022-66322366.

 

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