The correlation between the top 10 companies in the 50-share Nifty index by market capitalisation and the next 40 companies has seen a change over the last one and a half years.While the top 10 companies by market-cap have gained around 21.4 per cent since January 2018, the remaining 40 have seen market-cap coming down by 14.6 per cent, according to a study by Edelweiss.As per Edelweiss’ observations, an index comprising of the rest of the 40 companies would stand at 9,000 levels while the benchmark currently is trading just below the 11,000-mark. 70491179 This indicates a divergence between the performance of the top 10 stocks and the remaining 40 companies. This also reflects that beyond the top 10 companies, the market breadth is weak.From July 5 — when the current round of market weakness started — the Nifty has fallen 7 per cent and Sensex is down 6.3 per cent. The mid- and small-cap indices on the BSE have fallen 8 per cent and 11.2 per cent, respectively, from that date.The union budget presented on July 5 spooked the market as the government raised taxes on the super-rich, which also applies to foreign funds. This, coupled with lack of any measures to revive the slowing economy and consumption sector distress, saw foreign portfolio investors offload Indian stocks to the tune of Rs 13,300 crore in July.“The large-caps were still holding on just before the announcement of introduction of super-rich tax in the Budget, after which the large caps too have witnessed a sell off,” said Edelweiss.
from Economic Times https://ift.tt/2YwB1e9
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