Last week’s two-week downturn was put to rest as India’s big-name stocks put on Rs 1.90 lakh crore in value, with ICICI Bank outdoing the rest. It was part of a wider equity upturn: the Sensex put in 1,284.61 points (1.73%) and the Nifty 256.2 (1%). Banks were the ones making the noise; IT and insurance were left in the dust.
Banks set the pace as markets rebound
You had both private and public sector lenders underpinning the recovery. ICICI was first out of the blocks, up by Rs 56,223 crore to a total of Rs 9.61 lakh crore. Then there was HDFC, which saw its book value go up by Rs 38,571 crore to Rs 11.89 lakh crore, and SBI, which put on another Rs 36,138 crore for a tally of Rs 9.39 lakh crore.
What you have with the financials is an investor base that wants to see strong balance sheets and where the credit is going, rather than what is happening in exports. That has been the story of the week, and it has redefined the field for some of India’s priciest stock names.
Winners and laggards among the top 10
Telecom, consumer and industrials were in on it, but in a more subdued way. Bharti Airtel put on Rs 14,380 crore to be valued at Rs 11.11 lakh crore. Bajaj Finance was up Rs 18,367 crore to Rs 5.72 lakh crore, L&T moved to Rs 5.57 lakh crore on a gain of Rs 13,241 crore, and HUL added Rs 10,984 crore to hit Rs 5.09 lakh crore.
Reliance didn’t do much, only adding Rs 2,098 crore to its Rs 17.49 lakh crore, but it is still the king of the hill. TCS, on the other hand, let go of Rs 13,296 crore to come in at Rs 7.82 lakh crore, and LIC dropped a modest Rs 822 crore to Rs 5.05, which put a damper on the overall numbers.
If you look at the order of things, it goes like this: Reliance, HDFC, Airtel, ICICI, SBI, TCS, Bajaj, L&T, HUL and then LIC. The list says it all about how much clout the banks have in the top tier these days.
A few things to note from the week:
– You had eight of the top 10 in the plus column
– ICICI was the one to beat
– TCS and LIC took a step back in value
– Reliance is still the most valuable in India
What drove the sentiment shift
The market has been a little more well-rounded with the macro picture looking up. “We put an end to some volatility and a two-week losing streak on a high,” says Ajit Mishra, SVP of Research at Religare Broking, “with better global headwinds and the RBI being a bit of a help when it comes to foreign currency.”
Mishra is also pointing to the talk of a US-Iran deal as a source of good feeling, something that should calm the waters in energy and geopolitics. And the RBI has done its part with new forex swap options for ECBs and FCNR(B) deposits, which has given a lift to liquidity and inflows.
All of that has taken the edge off risk aversion and sent money into the large caps. The banks, being so tied to funding and credit, have been the main beneficiaries. The tech side of the house, for all its export links, has not fared as well.
Why it matters for investors now
The way the gains are spread around is telling. So long as there is some support for liquidity and the geopolitical situation doesn’t heat up, you can expect the financials to keep their footing. ICICI’s run is putting some pressure on the others and closing in on the bigger fish.
Then you have the more defensive or rate-sensitive plays holding their own. Airtel and HUL are moving in a way that shows people want some certainty in their cash flows. And with L&T, there is a clear belief in the capex story in infrastructure.
It is a data-driven game for the time being. We will be on the lookout for what the RBI does on the currency front and any movement on the issues Mishra has put on the table. The scorecard from the past week is unambiguous: the banks are in charge, and the top of the market is being reworked around who has the best visibility on earnings and liquidity.
For the moment, the question is whether the 1.73% the Sensex and 1% the Nifty put in can hold. With valuations in the top names having turned over by Rs 1.90 lakh crore, it is your positioning, not the headlines, that will matter for the next move.
