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Sensex Return Skewed by Top 12 Stocks
Aug 9, 2018


The Indian stock market has had a hard time of it in 2018.

But a look at the Sensex would suggest just the opposite. The BSE Sensex is up by 11.4% in the current year.

The real picture can't be further from the truth. Only 12 stocks are responsible for Sensex touching their lifetime highs. TCS, Infosys, Reliance along with few other stocks have led to this outperformance.

The top 12 stocks have returned 25.5% on an average while the other 19 stocks in the Index have declined by 12% on an average.

Corporate governance issues at mid and small cap companies have led to their corrections from sky high valuations a year ago.

Even among Sensex stocks, Tata Motors, Vedanta, and Bharti Airtel have performed poorly due to structural issues in their businesses.

What happens when the top 12 fail to meet the market's expectations?

There is a strong possibility they might take down the other 19 stocks and the index further with them. In such a situation, despite the recent correction, mid and small caps won't be safe either.

Data Source: BSE India
* Average return of the Top 12 / 19 stocks.

This Chart Of The Day was published in The 5 Minute WrapUp - The Virat Kohli Effect in the Sensex is Throwing Up Buying Opportunities Now

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