One-third BSE 500 firms hit 52-week high

In July,as many as 168,or 34%,of the BSE 500 companies have hit their 52-week high.

If the number of companies hitting 52-week high is any indication,the market may have little headroom now. In July,as many as 168,or 34%,of the BSE 500 companies have hit their 52-week high. BSE Sensex gained about 2% during this period. On Wednesday,share prices of 29 companies hit the 52-week high.

Analysts believe the trend indicates that market might peak over the short-term. Forty-four firms highest for the month – hit their years high on July 23,the day the market touched the years high. More than 30 scrips have hit the years high in 12 of the last 24 trading days.

These firms are from banking,pharma and FMCG sectors. Sensex companies to hit 52-week high include HDFC Bank,ITC,Infosys Technologies,L&T and SBI.

Story continues below this ad

In July,62 companies have hit an all-time high,including Ashok Leyland,Nestle India,BPCL and Infosys Technologies. For the year till date,150 companies have hit their all-time high.

Last month,22 banks have hit the 52 week high. These include HDFC Bank,State Bank of India,Yes Bank and Axis Bank. Our economy is set to grow at a sustainable pace,so now banks are looking cheap to investors, said DD Sharma,senior VPresearch (retail),Anand Rathi Financial Services. And unlike sectors like metal (whose fortunes depends to a large extent on the cyclical commodity prices),banking is much more stable.

According to Rathi,the banking sector typically grows at three times the GDP growth rate. So,if our economy grows at about 9%,credit growth is expected to be robust at 25-30%. He believes that several mid-cap banking stocks such as Dena Bank and Allahabad Bank are still undervalued and available at an attractive discount. Unlike large caps,there is still scope for appreciation for mid-caps from the current levels, Rathi said. Scrips of defensive sectors such as pharma and FMCG have also seen good gains in July. Pharma companies to hit the 52-week high include Cadila Healthcare,Novartis India,Pfizer and Aurobindo Pharma.