Fertiliser stocks drop 3 per cent averagely post Budget

Due to the slow economic numbers and sluggish macro data, a lot was expected from the Union Budget, which was presented on February 1, 2020. Pre-Budget rally is very much evident of these expectations. Fertiliser stocks showed a strong rally in this, until Union Budget was actually announced.

Fertiliser stocks gave simple returns from October 1, 2019 to January 2020 of as much as 17 per cent on an average, as against 18 per cent negative returns in a period of one year. The net returns were as high as 80 per cent to 50 per cent, spread across all the market cap stocks. Bharat Agri Fert & Realty Ltd-a small-sized agri firm gained 80 per cent in just two months while, Coromandel International, the largest company in terms of market cap, gained 52 per cent during this period. In the data collected from 19 companies, with a market cap of Rs 18,000 crore to Rs 100 crore, only three stocks were had negative returns. The stocks such as Nagarjuna Fertilisers & Chemicals, Fertilisers & Chemicals Travancore, Zuari Agro, National Fertilisers etc rose by 37.60 per cent, 21.90 per cent, 21.73 per cent and 18.26 per cent, respectively.

On the contrary, from the announcement of Union Budget till February 13, these stocks have declined by 3.62 per cent, in a time span of just 13 days. Nagarjuna Fertilisers dropped the most during this period (-16.84 per cent). Going ahead, the street will remain cautious in the lack of any direct trigger. Few macro factors such as low crude oil prices and monsoon forecast may give support to the sector.