The Hindu Business Line : Market rally driven by only few large-cap stocks

The rally that has taken the market from a low of 8,900 points in June to 13,800 now is narrow and is being driven by a handful of large-cap stocks. This fact, noted before, was proved yet again in an analysis done by Business Line on the price movements in 2,300 actively traded stocks between June 14, when the market touched its nadir, and December 1.

Just 200 stocks have contributed to 90 per cent of the Rs 12.6 lakh crore added to market capitalisation by the sample between June 14 and now; in other words, 2,100 stocks account for just 10 per cent of the market cap added since June. The top 50 stocks of the sample account for 67 per cent of the addition to market cap between June and now. The present total market cap of the 2,300 stocks is Rs 34.8 lakh crore.

Amongst the top 50 stocks comprising the bluest of blue chips, the top 10 (which includes Reliance Communications, SBI and ICICI Bank) account for 37 per cent of the Rs 12.6 lakh crore added to the market cap since June. The next 10, which includes BHEL, Suzlon Energy, Unitech and Hindustan Zinc, account for 14 per cent of the incremental market cap.

Stocks from software services, telecom service providers and the banking sector have largely enabled the surge in the indices. The stars of the rally in the last few months have been Infosys Technologies, which has risen by 80 per cent since June 14, Tata Consultancy Services, Wipro, Bharti Airtel, Reliance Communications, ICICI Bank and SBI. Interestingly, the software services and banking sector stocks had missed out on the last rally that ended in May.

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