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Old economy is back with a vengeance - Views on News from Equitymaster
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  • Jul 7, 2000

    Old economy is back with a vengeance

    The last one-year has seen the markets pass through such peaks and troughs that it would make a roller coaster squirm. New economy stocks are largely to blame for this. But check out who's in the driving seat now.

    We ran two queries in our 'Market Stats' section. The first query was to list out the top gainers over the last one year in the BSE 'A' group. The other query was to find out the top gainers in the BSE 'A' group over the last one month. The results are an eye opener.

    Top gainers over the year   Top gainers over the month
    Name Return   Name Return
    HFCL 1253.3%   L&T 48.0%
    SSI 588.7%   Tata Power 37.8%
    Global Tele 437.8%   Wipro 31.8%
    ICICI Bank 435.4%   Sterlite 29.0%
    Satyam 387.5%   Century Ind 28.9%
    Infosys 352.8%   Corporation Bank 27.4%
    Sun Pharma 281.9%   Cipla 26.3%
    HDFC Bank 274.4%   Bank of Baroda 24.5%
    Wipro 272.4%   Hotel Leela 23.9%
    Sterlite 225.6%   Sun Pharma 23.3%

    While over the year it is the new economy stocks that dominate in terms of returns generated, over the last one-month the old economy stocks seem to have stolen the limelight. Surprising that just six months back even the thought that old economy stocks would be in the driving seat would have been laughed at.

    Another interesting fact to note that of the old economy companies that have made it to the top 10 list, four are restructuring their operations - L&T (cement division demerger), Tata Power (merger and telecom thrust), Sterlite Industries (metal business demerger) and Century Ind. (cement plant sale).

    June certainly seems to have been a good month for the old economy stocks. But whether they would be able to draw in funds in a sustained manner would depend on two key factors. First, whether these companies continue to restructure their operations to maximize gains and generate growth in both topline and bottomline. Second, what would be the investment climate surrounding the new economy stocks. If new economy stocks were to once again come in favour, funds would once again be diverted, while on the other hand funds could rush into old economy sectors.



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