Three Out Of Four Stocks Still Show Upside Despite Market Rally

As Indian markets continue their rally, the benchmark index Nifty 50 closed at a record high on Thursday. Consequently, the proportion of stocks trading without any estimated upside has risen to one in four.

According to Bloomberg data, over 25% of stocks are currently trading above their twelve-month consensus target price. Notably, NBCC India Ltd. shows the largest expected downside of 79%, having surged more than threefold over the past year.

This ratio has more than doubled since last year, when over 88% of stocks with analyst estimates still had an upside remaining. The median twelve-month upside for stocks covered by at least two analysts has decreased to 9.5%, down from 14.3% last year.

In the past year, analysts have become bullish on 28 stocks, now expecting positive returns, contrary to last year’s predictions of negative returns. Among these are Chennai Petroleum Corp. Ltd., estimated to have a 42.6% upside, and The Ramco Cements Ltd., with a 33% upside estimate.

Defying analysts' expectations, 21 of these stocks have delivered positive returns as of their current levels. For instance, ITD Cementation India Ltd. is currently 164% higher than a year ago, despite an anticipated 4% decline. Similarly, Lumax Auto Technologies Ltd., expected to fall by 21%, is now trading 50% higher.

Conversely, analysts turned bearish on 119 stocks previously expected to yield positive returns as of April last year. Only two of these, Vinati Organics Ltd. and Relaxo Footwears Ltd., are currently below their price from a year ago.

Over the past year, analysts initiated coverage on nearly 80 stocks. Of these, 72 are projected to have positive return potential, such as Yatra Online with a 34% upside and Jupiter Life Line Hospitals with a 23% upside.