By Even as benchmark indices hit record high on Monday, more than half of Nifty stocks are still underperforming massively. In early trade, the 50-share index hit all-time high of 12,451.80 while the Sensex also breached its life high at 42,566.34.
Data showed that around 27 stocks that constitute the Nifty index are still in negative. Overall, 21 stocks are down 10%-45% from the last time Nifty hit a record high. Non-participation of more than half stocks in the index while the Nifty hit record high in a span of nearly 10 months indicates wide polarisation in the stock markets.
“The defining feature of equity market performance in 2020, so far, has been the sharp divergences across and within sectors and companies. This highlights the differentiated impact of covid on various sectors. Clearly, the essentials (healthcare, staples) and technology/online/e-commerce businesses were impacted far lesser than the financials, cyclicals (metals, infrastructure, oil and gas) and discretionaries (travel, aviation, restaurants, hotels, etc.),” said Guatam Duggad, head of research, Motilal Oswal Financial Services Ltd.
On 20 January this year, the Nifty had previously hit life high at 12430.50. Since then, stocks that have lost severely are ONGC (down 46%), Indusind Bank (down 45%), Coal India (down 41%), Bajaj Finserv (down 35%), IOC (down 34%), Gail India (down 32%), State Bank of India (down 31%) and Tata Motors (down 29%).
Overall, for healthcare and technology sectors, the pandemic acted as a tailwind, leading to their sharp outperformance in 2020. On the contrary, financials bore the maximum brunt of covid.
Out of all the Nifty stocks, only 14 stocks have risen 10%-70% during January-November. Stocks like Divi’s Labs (up 70%), Cipla (up 65%), Dr Reddy’s Labs (up 61%), Infosys (up 44%), HCL Technologies (up 42%) while Reliance Industries has gained 29% in the period.
Shrikant Chouhan, equity technical research, Kotak Securities said, “The sudden decline in dollar index has been the reason for the surge in our market. The dollar index slipped to 92 post the US election after trading at 94 prior to the US elections. foreign institutions have been heavily buying into cash as well as derivatives segment has also improved sentiment in the overall market.”
