The stock market may be on the uptrend, riding a wave of strong macro-economic numbers, and the rollout of the GST. Demonetization gave the economy a short hangover rather than the multi-quarter gloom that was predicted, and investors are expecting companies to recover from the weak Q3 to deliver stronger end year results.
There were however, some once-promising companies that bucked the upbeat trend and delivered investors double digit negative returns, despite the rising stock market. These companies are reaching the end of the finish line for FY17 hobbled by challenges - new competitors (as with Idea Cellular), regulation issues (FDA crackdowns on Divis, SunPharma) or anti-industry rulings (such as United Spirits, which is plagued by both government and SC support for abstinence and lower alcohol consumption).
With a drumroll, we present the biggest losers in largcap stocks.
The biggest losers in largecap
The Indian telecom industry took a heavy beating from the entry of Reliance Jio and the multitude of freebies it offered to telecom subscribers. Reliance Jio has permanently altered the telecom landscape and expectations of consumers in terms of prices and data availablity, and Idea Cellular, which didn't have the margin in its balance sheet to take on the Jio Juggernaut, has had to run into Vodafone's arms to survive. Investors lost nearly 30% of their wealth on this stock, as its share price plunged.
Indian IT, looking for growth in a tough global environment
The crackdown on outsourcing and immigration in key markets - Brexit in Great Britain, and the Trump administration's H1B restrictions in the US - have taken its toll on the Indian IT industry, with once wealth-creator Infosys turning into a definite wealth-destroyer, with investors now one-fourth poorer than they were a year ago. Wipro Ltd also took a hit, but Infosys suffered more sharply due to missed guidance, and infighting between the existing management and the company's co-founders.
A prominent presence among the top losers of the year are pharma companies.While the Sensex rose 13.93% over the last one year (as of today) BSE Healthcare went in the opposite direction, declining by 1%. The impact of this is clearly visible in the four pharma companies that are among the biggest losers.
One reason for this has been regulatory setbacks and delays in drug approvals, impacting the ability of these firms to leverage international markets for growth. Price erosion is impacting Aurobindo Pharma, while FDA inspections of plants resulted in observations and import restrictions for Sun Pharma that are only now being lifted, as well as serious FDA observations for Dr. Reddy's. Dr. Reddy's also lost a key litigation in the US over its generic.
| Company Name | % Change in Share Price (1 year till date) |
| Idea Cellular | -29.06% |
| Infosys Ltd | -25.35% |
| United Spirits | -20.31% |
| Sun Pharma | -18.8% |
| Aurobindo Pharma | -16.69% |
| Wipro Ltd | -16.52% |
| Dr. Reddy's | -13.95% |
| Bharti Infratel | -13.39% |
| Tech Mahindra | -11.43% |
| Lupin Ltd | -9.69% |
The bear casts a long shadow on some sectors
The sectors of IT and Pharma are impacted by problems that are likely to extend into FY18. The Trump administration has been reemphasizing the Make American, Buy American motto that had taken Donald Trump to victory, and the new rules are disproportionately set to impact these sectors. Proposed limits on funding for Obama's Affordable Care Act will also reduce government subsidies in medical programs, further impacting pharma growth in the US.
Party time looks distant for United Spirits as well, as Indian states such as MP and Chattisgarh have sent delegations to Bihar to study the successful implementation of the alcohol ban. Kerala and Tamil Nadu have already placed severe restrictions on alcohol sales. This combined with the SC ruling banning sales of alcohol near highways across India is impacting sales across the country, particularly in cities like Pune that have a dense network of highways criss-crossing the area. Sales industry-wide may drop as much as 15% according to estimates.
