Suzlon Energy, Reliance Power, IREDA, RVNL: Retail fav stocks hit hard; what's next?

Suzlon Energy Ltd, IREDA, Reliance Power Ltd, Rail Vikas Nigam Ltd (RVNL), Indian Railway Catering And Tourism Corporation Ltd (IRCTC), OLA Electric Mobility Ltd and Indian Renewable Energy Development Agency Ltd (IREDA) are among retail favourite midcap and smallcap stocks, which have fallen up to 53 per cent in the past one year. Among these top 15 midcap and smallcap stocks by number of retail shareholders, 11 have delivered negative returns in the past one year, data compiled from corporate database AceEquity suggests. 

Kotak Institutional Equities in a strategy noted said direct and indirect equity holdings of retail investors suggest their returns have trailed index returns and barely delivered positive returns over the past 16-18 months. The weak trailing returns over the past 18 months may increasingly test retail investors’ patience, it warned.

OLA Electric Mobility, which has 19.09 lakh shareholders as per latest shareholding pattern, has fallen 53 per cent to Rs 35.78 level in one year from Rs 76.39 level a year-ago, data till January 19 suggested.
GTL Infrastructure Ltd has plunged 45 per cent, IREDA eroded 35 per cent of its market value, RattanIndia Power Ltd lost 33 per cent while Reliance Power tumbled 23 per cent during the one-year period. 

RVNL, Trident and IRCTC declined 20-23 per cent while Suzlon Energy also fell 17 per cent. MOFSL today suggested a target price of Rs 74 on Suzlon Energy.

Jaiprakash Power Ventures Ltd and NHPC Ltd slipped up to 6 per cent. These are all constituents of BSE Mid Cap and BSE Small Cap indices. 

Without naming any stock, Kotak Institutional Equities said the prolonged time correction in broader equity markets, coupled with sharp price corrections in retail-dominated stocks, resulted in weak returns for direct holdings of retail investors, with retail investor AUM of NSE-listed stocks being
stable around Rs 43 lakh crore over the past 18 months. 

“Furthermore, the AUM of retail investors increased at a CAGR of around 15per cent over 2021-25, with the bulk of the increase taking place over March 2023 and June 2024. We note that direct flows of retail investors into equity markets have tapered off in recent months,” it said.

It said its own analysis of the top-20 retail-dominated stocks in the current Nifty-500 Index suggests that this portfolio of stocks has delivered negative returns since June 2024, after astronomical returns over March 2023-June 2024.

The same trends are also reflected in the basket of select narrative stocks, which have large retail ownership, it said.

“However, valuations of many of these ‘narrative’ stocks are completely disconnected from the fundamentals of companies, despite the recent correction on failure of many of these narratives. These stocks will likely lose a significant portion of their market cap. over time, which could prolong the pain for retail investors,” Kotak said on January 13.