INSUBCONTINENT EXCLUSIVE:
the market still has a lot of steam left.
But the polarisation within the Nifty pack suggests the time is ripe to go for some rebalancing
and bet on the underdogs.
Institutional money has of late moved mostly to the top 10 index heavyweights, which is higher than historical
trends, amid scarce earning growth and anxiety over election outcome
It is a defensive tactic, suggesting that money managers were positioning for a weaker market.
In the past, such moves were followed by the
keep moving into Nifty names, excluding the top-10 stocks
This makes the bottom 30 Nifty stocks the most lucrative place to be in
The weight of top 10 stocks has reached a historic extreme
polarisation have been visible in the past when market participants were concerned about economic growth and ended up moving a big portion
of their money into a few heavyweight names
Industries, HDFC, Infosys, ICICI Bank, ITC, TCS, Kotak Mahindra Bank, Larsen Toubro and Axis Bank are top 10 Nifty50 stocks with highest
Except for 2007, allocations to top 10 Nifty stocks have always peaked out at 58-59 per cent
They stood at 60 per cent at April-end.
Amid strong domestic SIP inflows and growth concerns, incremental money hid in fewer stocks
The portfolio being used to hide has hit the wall now, Elara Capital said.
Foreign brokerage UBS has raised questions over this rising
polarisation within the Nifty pack.
The earnings trajectory has lagged other emerging markets materially, UBS said, adding that the broader
market and midcaps have continued to struggle
moving from polarisation to depolarisation may take some time, but being in a crowded portfolio at this time when the whole market has
already started moving may be a risky strategy.
Money may move to top 100
In the case of the broader market, say NSE500 index, the
NSE500 index will continue to lose relevance for a fund manager and shifting of allocations can continue to happen in the top 100 names in
recent cases.
In the case of negative events too, the selloff may not be very large as most portfolios are already positioned for a weaker
