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    A two-year rally, and still only 50 of top 100 cos beat the Nifty

    Synopsis

    Stocks such as HDFC Bank, HUL, HDFC, Bharti Airtel, Kotak Bank, Maruti, ONGC, Nestle, among others, have underperformed the Nifty in the past two years. ITC, Axis Bank, Coal India, BPCL, ICICI Lombard, Colgate, Petronet, Indraprastha Gas and Federal Bank among others are trading below their prices two years ago.

    NiftyGetty Images
    Analysts are betting on stocks in auto and banks, which have underperformed, to do better in 2022.
    Mumbai: The polarisation in India's stock market continued amid the rally in equities in the past two years. Out of the top 100 domestic stocks in terms of market capitalisation, 50 underperformed the benchmark Nifty in the period. Analysts said investor focus on new public issues, midcaps and small-caps resulting in these blue-chips falling out of the limelight. Sharp valuations of some of these shares could have also dented demand.

    Stocks such as HDFC Bank, HUL, HDFC, Bharti Airtel, Kotak Bank, Maruti, ONGC, Nestle, among others, have underperformed the Nifty in the past two years. ITC, Axis Bank, Coal India, BPCL, ICICI Lombard, Colgate, Petronet, Indraprastha Gas and Federal Bank among others are trading below their prices two years ago.

    "The 3-4 crore new retail investors who have entered the equity markets since the pandemic struck in March 2020 have been buying high-risk stocks for a quick buck," said G Chokkalingam, CEO, Equinomics Research and Advisory. "So large-cap stocks have been so polarised that just a handful of them have contributed in the rally."

    The Nifty has rallied 42.57% since January 25, 2020. The index has jumped 130% since March 23, 2020 - when it touched a four-year low of 7,511 following the sharp sell-off sparked by the spread of coronavirus.
    niftyrallyET Bureau

    The underperformance of many of these blue-chip shares was on account of rich valuations, which could not sustain after the business disruptions on account of the pandemic hurt them. "It started with the weak performance of the economy impacting their asset quality, credit growth, pricing, and volumes forecast impacting profitability," said Vinod Nair, head of research Geojit Financial Services.

    The underperformance of shares of lenders such as HDFC, HDFC Bank and Kotak Mahindra Bank aggravated from October 2021 led by selling by foreign investors. Similarly, several FMCG stocks underperformed due to high valuations.

    Analysts are betting on stocks in auto and banks, which have underperformed, to do better in 2022. These include large banks, which are still not considered expensive as their December quarter results indicate a recovery in credit growth, net interest margins (NIMs) and asset quality.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

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