Five stocks accounted for over 50% of increase in Nifty’s market cap

Five stocks including Reliance and TCS accounted for over 50 percent of the increase in the Nifty 50’s market capitalisation over the past two months.

Both the BSE Sensex and the Nifty advanced almost 11 percent each since September 30. The Nifty gained 1,800 points while the Sensex added 6,270 points. The Sensex hit a record high of 62,887.4 on November 29, while the Nifty touched an all-time high of 18,678.10 points.

The rally that started at the beginning of October was largely due to buying by foreign investors and softening crude oil prices, which helped improve investor sentiment.

However, the rally was not broad based and the participation of mid-cap and small-cap stocks was limited. The BSE MidCap and the BSE SmallCap indices each rose 4.8 percent since the end of September.

Only a handful of stocks on the Nifty were part of the rally, which took the index’s market capitalisation to Rs 148.92 lakh crore on November 29 from Rs 135.56 lakh crore on September 30, an increase of Rs 13.35 lakh crore.

During this time, the market cap of the top five stocks – Reliance Industries, Tata Consultancy Services, HDFC Bank, Infosys, and HDFC, together increased by Rs 7.05 lakh crore, accounting for more than 50 percent of the gains in the Nifty’s market cap. Reliance Industries alone contributed almost 20 percent to the increase.

The next 10 stocks together contributed over 35 percent to the up move. While 24 stocks on the Nifty registered gains of less than 1 percent during this period, seven were in the negative.

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Although many sectors barely participated in the rally, analysts said the gains in the benchmark indices will continue amid expectations of a pause in interest rate hikes by central banks globally as inflation eases and as economic growth is expected to slow. Softer commodity prices and improving macro-economic parameters will help to boost this rally, they said.

Analysts have started increasing targets for the Sensex and the Nifty even though economic growth estimates have been lowered by foreign and local brokerage houses, the International Monetary Fund, the Reserve Bank of India and rating companies including S&P Global, Moody’s and Fitch.

Investors now await India’s GDP data on November 30 and the RBI’s bi-monthly policy on December 5-7 for further cues. Monthly auto numbers, PMI and inflation numbers will also be watched.Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.