These stocks helped Sensex rally 6,000 points in seven months

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The BSE Sensex on August 18, 2021, surpassed the 56,000-mark for the first time ever. Following the upbeat sentiment, the market capitalisation of BSE-listed companies reached its all-time high of Rs 2.42 lakh crore. Since its inception, with 1978-79 as the base year (Sensex level 100), the bellwether index has rewarded the long-term investors handsomely. On July 25, 1990, Sensex touched the four-digit figure for the first time and closed at 1,001 after a good monsoon and excellent corporate results.

Over the decades Sensex saw its share of highs and lows led by Manmohan Singh’s liberal budget, Harshad Mehta scam, Global financial crisis, UPA winning the second term, NDA wins and Covid-induced disruption among others. Sensex crossed the 50,000 mark for the very first time in January 2021 after India started rolling out a vaccine for Covid-19.

Over the last seven months, Sensex has had a dream run as it skyrocketed over 6,000 points or 12% on the back of a development led budget, economic recovery led by lockdown restrictions. However, the second wave of Covid pace slowed down the pace of rally to some extent but robust earnings by corporate India.

“It is interesting to note that the Sensex has multiplied 560 times since its inception with 1979 as the base year. By averaging around 15% CAGR during the last 42 years, Sensex has rewarded long-term investors handsomely. However, the journey of the market has been volatile with sharp ups and downs unnerving the short-term investors and traders. The future would be no different. The present bull run primarily driven by the new retail investors is in an overbought, richly valued zone. This year metal index has been the outperformer with Nifty Metal Index leading with 76 % return followed by the Nifty IT Index with 38% return,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Top stocks

In the journey of 6,000 points to the 56,000-mark, 25 of 30 Sensex stocks delivered positive returns. Leading the Sensex pack was Tata Steel rallied 124.93% from Rs 666 on January 21, 2021 to Rs 1,499 on August 18, 2021. Followed by Bajaj Finserv (up 65.89%), State Bank Of India (up 42.35%), Tech Mahindra (up 40.74%), Ultratech Cement (up 36.97%), Sun Pharmaceutical Industries (up 34.33%), Infosys (up 29.43%) and Bajaj Finance (up 27.90%) were among the top stocks that rallied over 25% in the past seven months.

“Investors are now finding comfort in the largecap space which provides more margin of safety over the broader market at current levels. We continue to see the broader market doing well, so any dips should be utilised to build positions in quality stocks where the earnings visibility and the balance sheet strength is very high. Returns from current levels will be more calibrated and focus on quality and value will yield sustainable returns,” said Naveen Kulkarni, chief investment officer at Axis Securities. ICICI Bank (up 24.65%), Titan Company (up 23.95%), Power Grid Corporation Of India (up 23.35%), NTPC (up 21.16%), Larsen & Toubro (up 19.10%), HCL Technologies (up 14.18%), Axis Bank (up 11.65%) and Asian Paints (up 10.64%) were among other top performing stocks from the Sensex pack.

On the other hand, stocks like Mahindra & Mahindra (down 1.85%), ITC (down 2.20%), Kotak Mahindra Bank (down 5.81%), Dr. Reddy’s Laboratories (down -7.26%) and Maruti Suzuki India (down -15.26%) were the laggards.

“The overall trend of the market remains positive led by the easing of restrictions, lower active COVID-19 cases, and a pickup in vaccinations. The market has been witnessing a rotation from mid to large caps – a phenomena we believe could continue as well in the near term given the sharp outperformance of the broader market in the last 18 months. Given the selling pressure in the broader market, the traders should be cautious and adopt a stock-specific approach while investors can take advantage of the volatility and accumulate quality stocks on dips,” advised Siddhartha Khemka, Head – Retail Research of Motilal Oswal Financial Services.