Story in Chart | Nifty @16000 is part of broad-based market rally

The benchmark index Nifty hit the 16,000-mark for the first time on August 3 which translates into an upside of over 14 percent so far in 2021. The index completed the last 1,000-point journey from 15,000 to 16,000 in about 6 months. It took the index four years to climb 6,000 points from the 10,000 levels.

While the rise in the benchmark index is in keeping with the narrative of big companies doing well after the initial shock of the COVID-19 pandemic, the rally hasn’t been restricted to big companies alone.

One way to gauge this is to look at the market cap of the Nifty 50 companies as a proportion of India’s overall market cap. As the chart below shows, this number was as high as 60 percent in July 2020. This was the time when the big stocks were leading the bounce back after the markets crashed due to COVID fears in the last days of March.

Since then, however, there has been a broad-based rally. The overall size of the market has also grown thanks to the spate of new listings from the initial public offers (IPOs) rush.

Thus, the Nifty 50’s share of the overall market cap has reverted to around 53 percent, almost the same level as when the index was at 10,000.