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How much have financial stocks weathered the storm?

Tuesday, September 4, 2007

The financials space has been buzzing and several stocks have recovered a fair bit from the lows touched during August.

The financial stocks have come back on to the radar very recently. They bore the brunt of the correction in the last one-month, primarily most of these are very high beta stocks and they felt the ripple effect of the global sell-off in the financial markets, although we didn’t have any real exposure to a lot of subprime loans.

To put things into perspective, the Sensex corrected about 13% in the last one month, out of which it has retraced about 10% of those losses, 9% coming in the last 8 days.

Looking at some financial stocks, India Infoline which corrected 33%, retraced about 29% of its lows, out of which 22% has come only in the last 8 days.

Indiabulls Financial that was down about 30%, has retraced about 17% out of its total 28% in the last 8 days.

2 stocks, which outperformed the markets even during the fall, were IFCI that were down about 9.5%. It retraced about 34% of those lows, out of which 21% came of the last 8 days. IDBI, which was down about 7%, retraced 25% of those lows, retraced 22% in the last 8 days.

Now, we got indications through the rollovers. We saw lot of long rollovers. In fact, all the financial stocks rolled over around 88% out of their positions, compared to a market-wide rollover of about 82%. That gave us a lot of indications. Some other stocks that were worth the mention were Reliance Capital, which has rallied 17% in last 8 days of the 23% correction that it has faced.

JM Financial, IL&FS Investsmart, Emkay Share, Prime Securities and Geojit Financial are some stocks worth a mention. In fact, JM Financials is buzzing today. It corrected only 2% and in the last 8 days, it has rallied around 17%. Emkay, sort of stood out – the IPO price was around Rs 120. And after about 48% retracement from its recent lows, it’s somewhere around its IPO price; it’s trading around Rs 127 now.

So, financial stocks have shown strength in conditions of calm and looking forward, we should see a rally in these stocks.

via Moneycontrol

Posted by FR at 8:02 PM  


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