Financial firms' clout wanes after coronavirus-triggered market fall

During the start of the year, private banks alone accounted for a fourth of the index weight.

Financial stocks have had a dominant run in the past decade and a half. In 2005, they weren’t even among the top five sectors when it came to their weighting in the Nifty index.

In 2009, private banks’ weighting in the index rose to 12.9 per cent, from just 5.4 per cent in 2005. Since then, it has only gone up. During the start of the year, private banks alone accounted for a fourth of the index weight.

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If one added the weighting of NBFCs and PSBs, the weighting in the index would shot up to 42 per cent. However, the Covid-triggered market fall has hit the financial pack the hardest.

The weighting of the sector has come off from the peak of 42 per cent in December 2019 to less than 33 per cent. Given the underperformance of banking stocks, it could shrink further.

Meanwhile, stocks in the pharma, and consumer goods space have seen their weighting go up in the benchmark indices. On a stock specific basis, Reliance Industries has seen the highest increase in weighting.

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Barring three stocks - Eicher Motors, Shree Cement and Bajaj Finance - all the Nifty components have gained during this two-week period.

The markets have rebounded nearly 15 per cent from their coronavirus lows logged on March 23, when the Nifty had posted its biggest single-day loss to end at a four-year low of 7,610. The index jumped 9 per cent jump on Tuesday to end at 8,792, gain of 1,182 points in two weeks.

Barring three stocks — Eicher Motors, Shree Cement and Bajaj Finance — all the Nifty components have gained during this two-week period. However, the share prices of only 23 Nifty companies have bettered the benchmark.

Further, only eight stocks have accounted for nearly two-thirds of the gains. Among the biggest contributor to the Nifty spurt from the March 23 low is Reliance Industries.

Shares of the Mukesh Ambani-led firm has been the biggest gainer and also the largest contributor to the index gains. It has rallied 36 per cent and have accounted for 21 per cent of the Nifty’s 1,182-point gain.

HDFC Bank, Infosys, and Hindustan Unilever have been the next largest contributors, even though aren’t the biggest gainers. The notable laggards are automobile, NBFC and metal stocks.