Sensex zoomed 31,000 pts from March 2020 lows, but broader market still took the cake

It took Sensex just 17 months to add 31,000 points from a March 2020 low of sub-26,000 level to hit 57,000 level for the first time ever on Tuesday. This is against 31 years (since its inception in 1986) the index took to touch the 31,000 mark for the first time in May 2017.

But the market capitalisation of the 30-pack index has swelled 122 per cent during this 17-month period against 140 per cent for the BSE market capitalisation. Data showed 18 of 30 Sensex stocks have failed to match this 140 per cent return since March 2020 lows.

Laggards included Hindustan Unilever, which gained mere 32 per cent from March 24, 2020 level. That day, the BSE Sensex hit a low of 25,638.90. ITC with a 39 per cent rise failed to live up to the expectations. Another FMCG stock Nestle India added only 45 per cent during the period. NTPC, Kotak Mahindra Bank, Maruti Suzuki, Bharti Airtel and Power Grid remained some stocks that rose 48-60 per cent. Dr. Reddy’s Laboratories (up 63 per cent), HDFC (83 per cent) and Bajaj Auto (up 92 per cent) also failed to double investors’ money during this period.

Asian Paints, HDFC Bank, TCS and Titan Company rose 100-120 per cent, but still lagged the broader rally by at least 20 percentage points.

HSBC Asset management in a note said that most equity markets globally have had a good run since the Covid panic attack in March 2020, but a few had it as good as India equities.

“Smallcaps have outperformed midcaps by 15 per cent, which in turn have bested largecaps by a similar margin,” it said.

Data compiled from AceEquity suggests only three Sensex stocks Tata Steel (up 429 per cent), Bajaj Finserv (up 268 per cent) and IndusInd Bank (up 221 per cent) have managed to beat the BSE Smallcap’s 202 per cent return since from March 24, 2020’s closing of 8,877.58.

“Some have theorised that the favouritism towards smallcaps is due to increased retail participation in the Indian stock market. In fact, a report from NSE indicates that retail investors accounted for 45 per cent of stock total turnover in FY21, up 6 percentage points from previous year,” the HSBC said.

The brokerage, however, noted that despite smallcaps scaling new highs, its valuation premium vis-a-vis say Nifty50 has fallen to 17 per cent from a 5-year average of 21 per cent.

That said, gains for Sensex this year have been consistent and the index is far less volatile than last year that had at least 14 occasions where the BSE barometer tumbled over 1,000 points in single sessions.