How 7 Hrithik stocks have hijacked Nifty away from Salman’s six-pack

At the start of 2020, many analysts were betting big on the non-Nifty heavyweights.

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Hrithik is an abbreviation for seven stocks -- namely HDFC Bank, Reliance Industries, Infosys, TCS, HDFC, ICICI Bank and Kotak Mahindra Bank.
NEW DELHI: Rising risk aversion in wake of earning downgrades has resulted in outperformance of heavyweight Hrithik stocks against the Salman pack so far in 2020.

Hrithik is an abbreviation for seven stocks -- namely HDFC Bank, Reliance Industries, Infosys, TCS, HDFC, ICICI Bank and Kotak Mahindra Bank. The 10 Nifty heavyweights account for 45 per cent of the index weightage.

Salman, on the other hand, is the abbreviation for SBI, Axis Bank, Larsen & Toubro, Maruti Suzuki, Adani Ports and NTPC. Also Nifty constituents, these stocks have a lower heft of 10.77 per cent in the index.


At the start of 2020, many analysts were betting big on the non-Nifty heavyweights. But concerns over Covid-19 have triggered a buying spree in industry leaders.

Data compiled from corporate database AceEquity showed Hrithik stocks have together seen a 30 per cent jump in value from their March lows, compared with an 11 per cent recovery in Salman stocks and 19 per cent rise in the Nifty50 pack.

Hrithik stocks had also fallen less at 35 per cent compared against the Salman pack’s 46 per cent drop during the market selloff till March 23 lows.
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Year-to-date, Hrithik stocks are down 16 per cent against a 24 per cent fall in Nifty and a 40 per cent plunge in the Salman pack.

The trend was consistent with their 2019 performance, when market value of Hrithik stocks climbed 24.9 per cent compared with a 5.16 per cent rise in the Salman stocks.

“The market is rewarding businesses that are thriving and growing in this difficult phase. The principles of economics are working quite well through this phase,” said G Chokkalingam, founder of Equinomics Research & Advisory.

Among Hrithik stocks, Reliance Industries has rallied 78 per cent from its March 23 low of Rs 875 in a rally powered by three back-to-back deals with global partners for its telecom venture Jio Platforms. These investments brighten the prospects of the Mukesh Ambani-led firm’s quest to become net debt free by March 2021.
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Infosys has soared 30 per cent to Rs 680 odd level from March lows while TCS has climbed 17 per cent during the same period. Analysts said export-oriented Infosys and TCS are hit relatively less by coronavirus disruptions than the domestic market-exposed companies. They are also benefitting from a weakening rupee.

HDFC Bank advanced 18 per cent since then, while ICICI Bank and Kotak Mahindra Bank have added 8-12 per cent.
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HDFC Bank reported the strongest growth among peers in March quarter -- a 21 per cent year-on-year growth in advances and 24 per cent jump in deposits. ICICI Bank (18 per cent) and Kotak Mahindra Bank (16.4 per cent) also saw healthy growth in deposits for the quarter. But advances rose 6.7 per cent for Kotak and 10 per cent for ICICI Bank during the quarter. Hurt by real estate woes, HDFC has so far recovered only 8 per cent from March lows.

Among Salman’s stocks, Adani Ports has been the best performer from the March lows, rallying 40 per cent. Axis Bank is up 23 per cent while Maruti Suzuki has gained 17 per cent. L&T and NTPC have advanced 13 per cent each, but SBI is down 8 per cent.

SBI’s March quarter profit fell 66 per cent while Axis Bank reported a Rs 1,388 crore loss. Maruti reported nil sales for April. L&T, analysts say, can be a good play on capex revival.

Four out of six Hrithik stocks – RIL, Infosys, ICICI Bank and TCS – have maintained their position in Nifty in last 15 years, while HDFC Bank has seen the maximum improvement in its weightage during the same period.

Since December, RIL has gained 350 points weightage in the index, the highest for any stock, while Infosys has raised its by 120 basis points, shows a study by Motilal Oswal.

Salman stocks such as SBI and Axis Bank, Maruti and L&T have seen erosion in index weightages by up to 90 basis points since December 2019.

Chokkalingam said while earlier there was a divergence between leaders and the followers in terms of market-cap buildup, now divergence is growing among the leaders.

“Leaders of sustainable businesses will keep on growing in the short term,” he said.
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