Benchmark indices and the broader markets have corrected significantly from the recent highs, led by deepening economic slowdown, weak corporate earnings and certain policy decisions in the Budget on taxation.
According to a report by Motilal Oswal, the overall market capitalization of BSE500 companies is down 11 percent from its peak of Rs 148 lakh crore in August 2018. Over the same period, the market cap of the Nifty50 is down by 6 percent to Rs 80.1 lakh crore, NSE mid-cap 100 by 17 percent to Rs 14.3 lakh crore and NSE small-cap by 15 percent to Rs 4.4 lakh crore, the report added.
There is a rush to invest in 'safe' stocks since December 2017, with investors taking refuge in quality large-cap names amidst heightening volatility.
The brokerage noted that 80 percent of the correction in the Nifty’s market capitalization since August 2018 has been driven by Maruti (17 percent), ITC (15 percent), ONGC (12 percent), Yes Bank (10 percent), M&M (9 percent), Coal India (9 percent) and Sun Pharma (9 percent).
Meanwhile, private financials like HDFC, ICICI Bank, HDFC Bank, Kotak Bank and defensives like TCS and Bharti Airtel have contributed positively to Nifty's market capitalisation.
From a five-year perspective, the Nifty’s market-cap expanded to Rs 80 lakh crore. The top 10 constituents on the index have contributed a staggering 81 percent (Rs 21.5 lakh crore out of Rs 26.6 lakh crore) to the Nifty's gains, underscoring the highly polarized nature of market returns even over a five-year period, it observed.
RIL contributed 18 percent, HDFC Bank 15 percent, TCS 12 percent, HUL 9 percent, and Kotak Mahindra Bank 8 percent - were the top five contributors (cumulatively 62 percent) to the Nifty’s market-cap expansion over five years.
RIL (Rs 4.9 lakh crore), HDFC Bank (Rs 4 lakh crore) and TCS (Rs 3.3 lakh crore) were the three companies in India that added over Rs 3 lakh crore incremental market-cap over the five-year period.
On the contrary, Vedanta (Rs 0.3 lakh crore), Sun Pharma (Rs 0.7 lakh crore), Coal India (Rs 1 lakh crore), Tata Motors (Rs 1.2 lakh crore) and ONGC (Rs 2.1 lakh crore) are the Nifty stocks witnessing maximum market-cap erosion over the same period.
The report also said that amongst the BSE-500 constituents, out of the total market-cap correction of Rs 16.8 lakh crore from Rs 148.4 lakh crore in Aug 2018 to Rs 131.5 lakh crore now, automobiles accounted for the highest (25 percent, lost Rs 4.2 lakh crore), followed by Metals (13 percent, Rs 2.1 lakh crore), Consumer (10 percent, Rs 1.6 lakh crore), Healthcare (9 percent, Rs 1.5 lakh crore) and Oil & Gas (7 percent, Rs 1.1 lakh crore).
On a sectoral basis, market returns over the last five years have been led by a select few sectors. In fact, top four sectors – Private Banks (23.3 percent), Consumer (21.1 percent), NBFC (15.5 percent), IT (14.5 percent) – contributed three fourths of the absolute change in the market-cap of the BSE-500 companies over the last 5 five years, the report added.
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