The 2008 financial crisis, which led to the destruction of wealth not just in India but across the globe, left many in hope of price recovery. Globally, stock markets lost $37 trillion in market value.
In India, the S&P BSE Sensex crashed 60 percent from the peak while foreign investors (FIIs) sold and exited resulting in capital outflows of over $12 billion leading to INR depreciation of nearly 25 percent.
Indian market bottomed out in October 2008 and has since then rallied over 400 percent, while there are many stocks which have given 10,000-50,000% returns since then.
But, there are nearly 500 stocks on the BSE which are still trading below 2008 valuations. Many stocks in the banking space have faced the heat which includes Bank of India, Oriental Bank of Commerce, Allahabad Bank, Andhra Bank, Corporation Bank, and Union Bank of India, according to data compiled from AceEquity.
Investors who are still stuck with stocks which are trading below 2008 valuations should reconsider their decision. Because post-2008 crisis bulls took charge and pushed the index to record highs while at the company level we saw massive unlocking of value.
If stocks are still trading below 2008 levels it could be due to internal reasons as all the external factors are taken care of, suggest experts.
“HOPE is a kind of biasness that actually halts an investor or trader's capability to take out good returns. It is one of those crucial psychological barriers that is very important to come. Even on a flipside, there is a holding of an investor that is since 2008 then it comes under the biases of being anchored to information or data that is no more relevant,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.
“Why? Because the bullish rally we have seen in last 10 years has been one of the best bullish rallies in last few decades that is not just isolated to EM or DM but rather widespread. If there is any company that is even below 2008 levels it is purely the internal factor that is inside the organization that may be Management, Vision, Business Model or a debt that is too high to Service. Classic Examples are Suzlon, JP Associates etc,” he said.
We have collated a sample of 40 stocks which are trading below 2008 price level:
When to buy & sell?
The decision to make a buy or a sell decision is very tough especially when everything is falling. Analysts recall their experience of 2008 crisis which nothing less than shocking.
“My personal experience during that time was that every trade taken in favor of bears was making money fast. Towards the end as we came closer to 2000 (Nifty), even with options it was dangerous to c/f positions overnight, so restricted our trades to intraday,” Shubham Agarwal, CEO & Head of Research at Quantsapp Private Limited told Moneycontrol.
“One thing became very clear during that time though. ‘Do not stand on the track when the train is coming through’. The biggest learning of taking trades only in favor of trend came out of the final move in this period,” he said.
The days of the Lehman crisis were amongst the most painful days experienced by investors in the past decade. Many investors were unable to suffer the pain of losses in their portfolios and exited their holdings as the sell-off intensified.
“The worst mistakes were made by investors that sold into the bad news, only to watch markets roar back in 2009. So, one key lesson that investors need to ponder is a methodology that enables them to sidestep the meaningful pain that is encountered during sell-offs,” Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management.
“There are a few different approaches, and one will make sense to an investor based on their investment and risk preferences. Time and again, buy and hold in India has proven to be an extremely profitable decision,” he said. Sharma further added that ‘Buy and Hold’ makes sense, if you’re buying quality at a reasonable price.