PremiumThe Sensex again zoomed past the psychologically significant 60,000 mark on Monday with the recent optimism in the Indian share markets pushing the headline index close to its last year’s peak
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MUMBAI : The Sensex again zoomed past the psychologically significant 60,000 mark on Monday with the recent optimism in the Indian share markets pushing the headline index close to its last year’s peak. However, the rally, driven by strong macroeconomic conditions, healthy corporate earnings, and improved rainfall despite weak global cues, does not appear broad-based and is limited heavily to large-cap stocks.
The 30-share blue-chip index has mostly caught up with its October 2021 highs and is only 3.4% below that level as of the closing of trade on Monday. However, across the universe of BSE-listed stocks, only a handful (6.7%) have done better than that, showed a Mint analysis. Among large-cap stocks, this share was 23.5%, while among mid-caps and small-caps, the share of stocks doing better was 16.2% and 5.7%, respectively.
This shows recovery is driven by the less-volatile large-caps.
Thus, more than 93% stocks on the BSE are still more than 3.4% down since their respective 52-year peaks. Overall, around 16% stocks remain down by more than half the share price of their last peaks. Only 5% of the analysed stocks are within 4% of their all-time highs, of which more than two-third are small-caps.
The analysis covered 3,176 companies listed on the BSE with companies accounting for the top 70% of the total market capitalization categorized as large-caps, the next 15% as mid-caps and bottom 15% as small-caps.
A segment-wise analysis showed that 7% large-cap stocks are less than 1% shy of regaining their one-year high price. Around 79% closed trading on Monday up to 25% below their one-year high, while 20% were down 25-50% from their previous high. The share of mid-caps and small-caps that are trading 25-50% below their 52-week highs is 30% and 40%, respectively.
Close to 17% small-cap firms are not even halfway through their one-year peak, while 23 small-cap scrips closed at their 52-week high price on Monday.
“The current rally is a bear market pullback that has been witnessed all over the world," said Vishal Wagh, research head of Bonanza Portfolio. “By nature, bear market rallies are only frontline and large and mid-cap leads. Broader participation is normally absent in such scenarios," Wagh said.
On an average, sectors such as auto and ancillaries and hospitality have less to catch up. They are down just around 16% from their 52-week highs. On the other hand, companies in the textiles segment and information technology space still have some way to go, trading more than 30% below their peak.
“The rally is mostly led by new leading sectors such as defence, old sectors such as auto, and sectors such as fast-moving consumer goods and consumption," Wagh said.
Earlier, the markets had swooned in June over risk-off sentiments but resilient economic activity and steady foreign flows of late have supported domestic markets.