The Nifty50 has rallied nearly 900 points so far this year and the large part of the rally was led by some of the heavyweights which are pushing the index to record highs almost on a daily basis.
The Nifty50, which closed at 10,530 on December 29, 2017 rallied to 11,387 on August 6, 2018, which translates into an upside of 857 points, or 8.1 percent, in the year 2018.
The large part of the rally, in terms of contribution, was led by gains in RIL, TCS, HDFC Bank, Infosys, Kotak Mahindra Bank, ITC, HUL, Bajaj Finance, HDFC, and M&M, according to a report by Arihant Capital.
On the other hand, stocks which are weighing or holding back the rally include names like ONGC, Tata Steel, Vedanta, Tata Motors, and ICICI Bank.
According to the report, RIL contributed over 200 points to the Nifty rally, followed by TCS which added 147 points, and HDFC Bank added 131 points to the Nifty.
Most of the stocks which led the rally also reported decent earnings.
For instance, Reliance Industries broke the Rs 1,000-barrier post Q1 results to hit record highs. The stock was stuck in a range in the past few years. Most brokerages have raised their respective target prices for the oil & gas major.
TCS impressed with 4.1 percent constant currency revenue growth ahead of consensus. Infosys’ performance was marginally weaker than expected but did just enough to indicate that the company was on track for a turnaround which led to brokerage firms reaffirming their faith in the stock.
Top five Nifty stocks that have led the rally this year also witnessed a rise in their weightage in the benchmark index.
RIL, which had a weightage of 7.79 percent as on January 1, 2018 increased to 9.29 on July 31, 2018. TVS, which recorded a weightage of 3.64 percent as on January 1, 2018 rose to 4.64 percent as on July 31, 2018.
HDFC Bank, which had a weightage of 9.64 percent as on January 1, 2018 saw its weight increasing to 10.01 percent towards July 31, 2018. (Refer to the above table)
The Nifty50 picked up momentum last month and is trading comfortably over 11,000 levels. Most experts feel that the strength in the market is here to stay as there are signs which suggest that mid & smallcaps have also bottomed out.
The immediate target which most experts are betting on is 11,500-11,600 for the Nifty. But, for momentum to continue, the index has to stay above 10,400-levels on a closing basis.
“We reiterate our bullish view on the market and maintain our target of 11,600 for Nifty. Beside earnings, participants should closely monitor updates on the progress of monsoon and global cues,” Jayant Manglik, President, Religare Broking told Moneycontrol.
“Traders should continue their focus on stock selection and prefer private banks, pharma and financial counters for fresh longs,” he said.
(Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)
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