Mumbai: Shares of debt-laden companies are among the most battered in the recent market sell-off as investors, taking stock of the macro-economic worries, lightened up their positions in these companies.Of the BSE 500 index constituents (excluding the companies that are part of Nifty and Sensex), shares of companies with the highest debt have fallen up to 51 per cent so far this year. Weakening of the rupee is also worsening market sentiment.“Some of these companies had run up beyond what fundamentals would justify. But when the environment becomes risky, the earnings of these companies become volatile. In this environment, it is better to stick to large caps and quality mid caps,” said Muthukrishnan.Abhimanyu Sofat, head of research at IIFL also advises staying away from leveraged companies.“One should get out of stocks with high leverage and companies that have high external commercial borrowings. With rupee falling, there could be mark-to-market hit for these companies,” said Sofat.

Source: Economic Times May 23, 2018 02:15 UTC