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Shunned by Funds

The markets have rallied to new highs, but these stocks have fallen to new lows

Some companies stocks just don't have it. The 'x' factor is what we are talking about, the ability to convince people to invest in them. Their popularity is at its nadir, so to speak.

Since March 2009, the stock markets have rallied hugely from the October 2008 lows that they had fallen to in the wake of the shocks received from the global financial crisis.

Ergo, the time was right for most stocks to climb to new highs, with both mutual funds and foreign institutional investors pumping in huge amounts into stock markets.

However, that has not been the case for some stocks, which have totally failed to retain even the small number of institutional investors that they had in May, and as a result, they are in a peculiar predicament of not having even one mutual fund house invested in them.

Among the biggest losers were Strides Arcolab, a niche products maker in the pharmaceutical/nutrition industry, and Ansal Properties, an infrastructure development company into construction, development and promotion of housing complexes.

Ansal Properties in the month of May had just one fund to boast of, which had an investment in its stock totaling Rs 6.73 crore. However, the month of June saw even that one fund sell out.

While Ansal Properties suffered more in terms of a great money-prop of its stock disappearing, Strides Arcolab had to put up with a double rejection in addition to the loss of scrip support. Two funds that were invested in Strides Arcolab in May sold out their entire stakehold in the company, which added up to a total of Rs 5.82 crore.

Another stock that has seen an exit is NMDC Ltd, although it had already read the writing on the wall as the holding by the solitary fund invested in it was just Rs 0.4 crore.

Indubitably, while the loss in terms of withdrawal of support must be galling in itself, what would hurt these companies more is the beating their image has taken after being totally abandoned by funds.

In effect, that can be interpreted as a vote of no confidence in the stock to create gains for the funds. This may even impact retail investors who would shun any stock that fund houses abandon.

While Ansal Properties was trading on the Bombay Stock Exchange at Rs 53.50 up by 4.8 per cent, Strides Arcolab was ruling at Rs 139.10, up by 2.05 per cent and NMDC Ltd was up by as much as 10 per cent at Rs 392.

Strides Arcolab, Ansal Properties, NMDC Limited, Hindustan Oil Exploration Co, Rajesh Exports, Kewal Kiran Clothing, Titagarh Wagons, Cholamandalam DBS Finance

Stocks Shunned in June
Scrip Name    Value May '09 (Rs cr)    Total Shares (in lakhs)    Fund Count
Ansal Properties & Infra   6.73   9.96   1
Strides Arcolab   5.82   4.40   2
Hindustan Oil Exploration Co   1.20   0.83   1
Rajesh Exports   0.71   1.60   2
Kewal Kiran Clothing   0.64   0.46   1
NMDC   0.40   0.09   1
Titagarh Wagons   0.25   0.08   2
Cholamandalam DBS Finance   0.07   0.12   1
Period: May 2009