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Financials, RIL, ITC among top Nifty contributors in 1 year

Together, the top six companies accounted for 87% of the Nifty rally, according to Capitaline data.Premium
Together, the top six companies accounted for 87% of the Nifty rally, according to Capitaline data.

Of the Nifty’s 1,509 point or 8.84% rally from a year ago, ICICI has topped with a 317-point contribution, followed by ITC (314 points), RIL (281), Adani Enterprises (153), Axis Bank (139.5) and SBI (114 points).

MUMBAI/DELHI : ICICI Bank, ITC, Reliance Industries, Adani Enterprises, Axis Bank, and State Bank of India (SBI) are the stocks that have fuelled Nifty’s rally to a high, with the banking sector expected to continue its outperformance even as market experts remained divided over the revival of the IT sector amid global headwinds. Earnings growth will determine the market’s course, the experts said.

Of the Nifty’s 1,509 point or 8.84% rally from a year ago, ICICI has topped with a 317-point contribution, followed by ITC (314 points), RIL (281), Adani Enterprises (153), Axis Bank (139.5) and SBI (114 points). Together, the top six companies accounted for 87% of the Nifty rally, according to Capitaline data.

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RIL, the stock that propelled the Nifty to fresh life and closing highs on Monday, would continue to be a market performer. The Nifty life high of 18,614.25 and closing high of 18,562.75 on Monday was led by RIL, which closed up 3.44% at 2,707.55 apiece.

A market performer mimics index returns while an outperformer beats index returns.

“RIL would remain a market performer, with banking and the IT sector being outperformers, going forward," said Gautam Duggad, research head, institutional equities, Motilal Oswal Financial Services.

“Markets from hereon would be led by earnings growth to justify the valuations," Duggad said.

Nifty’s valuation at 20 times price to earnings on a one-year forward basis is expensive, according to Axis Securities.

Samir Arora, founder and fund manager at Helios Capital, remains bullish on banking, given the robust credit offtake growth but isn’t optimistic on the “sustenance" of the recent rally in the IT sector, given the global macro headwinds led by interest rate hikes and the war in Europe.

The Nifty IT index, which has risen 7% through the past one month to 30,310, still remains significantly below its 52 week high of 39,446.7.

Experts also cite challenges to the rally emanating from broader market underperformance, though some feel it’s an opportune time to invest in small caps. “Whether there will be catch up by midcaps and small caps remains to be seen, given the challenges to earnings by risks of rising inflation and cost of money and other geopolitical uncertainties," said Rohit Srivastava, founder of data analytics firm IndiaCharts.

The Nifty Midcap 100 index trades around 2.5% from its 52-week high of 32,603.25 while the Nifty Smallcap 100 trades at 21% below the 52-week high of 12,047.45.

“Considering small caps have corrected meaningfully in 2022, it is a good time to utilise this fall and start building one’s small cap portfolio," said Yogesh Kalwani, head of investments, InCred Wealth.

Banks have seen robust performance with outstanding credit growth rising 16.98% to 129.26 trillion as on the fortnight ended November 4.

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