Rating disconnect widens as investors outpace analysts in Nifty 50 moves

Several downgraded names—such as Hindalco, Bajaj Finance and L&T—have posted strong gains, while upgraded counters including TCS, Infosys and ITC have slipped despite improved ratings.

A widening gap between brokerage recommendations and stock performance is shaping the trajectory of the Nifty 50, with nearly 40 percent of the index moving in ways that challenge analyst expectations. Over the past year, several stocks downgraded by brokerages have rallied sharply, at times outpacing the benchmark index, while many upgraded counters have fallen despite improved ratings.

Among the stocks that were downgraded but rose during the year are Hindalco Industries, Bajaj Finance, Shriram Finance, Larsen & Toubro, Bharti Airtel,  ONGC and JSW Steel.

On the other hand, stocks that received upgrades but declined include TCS, Wipro, Infosys, PowerGrid, HCL Tech, ITC, Dr Reddy’s Laboratories, Tech Mahindra, Sun Pharma, NTPC and Max Healthcare.

Hindalco is one of the most prominent examples of this disconnect. At the start of 2025, it had 22 buy calls, one hold and five sell ratings; the mix has since shifted to 12 buys, 10 holds and seven sells, according to Bloomberg data. Despite this, the stock has surged more than 37 percent this year.

Bajaj Finance has shown a similar trend. It began the year with 26 buy calls, six holds and four sells, and now carries 18 buys, 13 holds and six sells, while the stock has jumped 55 percent in 2025. Shriram Finance has climbed nearly 47 percent even as buy ratings slipped from 39 to 34, and Bharti Airtel has risen 32 percent while its buy calls fell from 29 to 25.

Experts said brokerage upgrades and downgrades are shaped by views on valuations, growth prospects and other determinants of earnings performance, leading to divergent opinions. This divergence also reflects in mutual fund performance, where a few right or wrong stock picks in a large-cap fund’s top holdings can significantly influence returns.

Deepak Jasani, independent research analyst, said most downgrades in 2025 were from buy to hold as rising market prices narrowed the gap with unchanged target prices. He noted that in many instances, consensus target prices remained higher than prevailing market levels, allowing stocks to continue rising despite downgrades. He added that analysts often take time to materially revise targets, while investors may identify major trends earlier.

The trend reverses among upgraded stocks that have underperformed. Trent, which increased buy calls from 12 to 17, has slumped nearly 40 percent this year. In the IT pack, TCS, Infosys and Wipro began 2025 with 30, 34 and 9 buy calls respectively, and now stand at 36, 37 and 13, alongside a rise in hold ratings and a decline in sell calls. Yet these stocks are down about 20 percent, 13 percent and 14 percent this year.

Other upgraded names such as PowerGrid, HCL Tech and ITC are down nearly 10 percent, while Dr Reddy’s Laboratories, Tech Mahindra and Sun Pharma have slipped between 7 and 8 percent.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said Bajaj Finance benefited significantly from GST cuts, a development not anticipated by brokerages when downgrades were issued on valuation concerns.

He said L&T delivered strong numbers despite a broader slowdown in private capex, supported by robust order flows from the Middle East. Vijayakumar added that Bharti Airtel’s earnings growth remained steady, and although IT stocks weakened due to muted guidance, their prospects now appear stronger.

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