We can classify sectors in to broadly two categories: Cyclicals and Defensives. Cyclicals are those that are directly impacted by economic growth and include capital intensive industries. Cyclicals would include Metals, Cement, Construction, Corporate lending banks, Capital Goods/Engineering, Hotels, Textiles, Telecom, Oil & Gas, etc. . Defensives sector would include FMCG, Auto, Consumer durables, Retailing, retail lending financials, IT & Pharma sector.
There have been prolonged phases where when the economic growth has been subdued the defensive sectors have done well. There have been prolong phases when the economic growth has been good the cyclicals sectors have done well. 1992 to 2001 was the phase where defensive sectors did well. From 2001 to 2008 Cyclicals out performed defensives by a mile and from 2009 till date defensive sectors have done well and Cyclicals have struggled big time. Between 1999-2001 cyclical stocks were going at dirt cheap valuations but money was chasing IT, Pharma & FMCG. In 2006-07, Pharma, FMCG & IT was going dirt cheap and money was chasing Cyclicals. Today large amount of money is chasing defensives.
There is a strong buzz in the air that this cycle is about to turn in favour of cyclicals sooner than later. This mail is my endorsement of that view.
The current phase has many similarities with 2001-2003 phase.
- For past 4-5 years PSU banks lending was slow/low due to NPA problem. PSU banks have provided for 12-13 lakhs Crs of NPA & this NPA cycle is coming to an end. In 2003 Bank NPAs were 13%, they came down to 5% by 2005. NPA peaked in Mar 2018 at 14% and now have come down t0 9.5%. Govt has promised to infuse PSU banks with 5Lakh Crs capital in next 5 Yrs. That would lead to lending to the tune of 40-50 lakhs Cr by them.
- A lot of excess capacities were created in 2007-2012 phase. Many of these were done with debt. Corporates have deleveraged heavily in past 5 years and at aggregate level their balance sheets are the healthiest since 2002. Capacity utilization levels is hovering aroung 75%. New capacities will start to come up in next 1-3 years. Govt is trying to woo global players to setup manufacturing base in India. If they succeed we will have a new private sector capex cycle starting. Govt has plans to spend a huge amount in infrastructure.
- Between 1998 and 2002, interest rates had come down from 11% to 5%. Home loans were available for 7% in 2003. Real estate sector has a big slack from 1994. In 2003 the gap between rental yield and home loan rate was less than 4%. In 2013 this gap had reached 7%, right now it stands at about 5%. With govt’s focus on affordable housing and agenda to create 10 Cr homes in 5 yrs we are already witnessing green-shoots in real estate sector. Repo rates are at lowest level in a decade and can go down further.
- One of the biggest driver for growth in 2003/08 phase was exports growth as china was growing at break-neck pace. Today globally there is talk that since monetary policy is not able to propel economic growth and stoke inflation, there is a need for fiscal stimulus in form of infra spending. That can potentially propel the global economy forward and create tailwinds for our exports. It can also mean higher commodity prices.
I am not predicting a re-run of 2003-07. It could be smaller than that or larger than that but the point I want to make is that in the next 5-8 years cyclicals would make a lot more money for investors than defensive sectors excluding pharma which has corrected already.
In the tables below I have some data on which stocks entered and exited Nifty since 1996 to make my point. As you might be aware a few stocks get included in nifty every 6 months and a few get excluded. This is done on the basis of marketcap. Stocks with lowest marketcap get excluded and stocks outside Nifty with highest marketcap replace them. In these tables I have shaded stocks from defensive sectors in green and stocks from cyclical sector in orange. The first table is of those stocks which got included in Nifty and second table is that of stocks that got excluded from Nifty.
You can notice the following:
- In 1996 to 2002 phase most stocks that got included in Nifty were from Defensive sectors and most stocks that got excluded from Nifty were from cyclical sector. Hence in 2002 the index was heavily skewed in favour of IT, Pharma & FMCG.
- In 2002 to 2009 phase almost all stocks that got include in Nifty were from Cyclical sectors. Hence Nifty weightage became heavily skewed in favour of Cyclicals.
- In 2009 till date almost all stocks that 25 out of 29 stocks that were excluded from Nifty were from cyclical sector. Hence today’s index is heavily weighted in favour of defensives.
Index Name | Event Date | Scrip Name | Description |
Nifty 50 | 18-09-1996 | ABB India Ltd. | Inclusion into Index |
Nifty 50 | 18-09-1996 | Asian Paints Ltd. | Inclusion into Index |
Nifty 50 | 18-09-1996 | East India Hotels Ltd | Inclusion into Index |
Nifty 50 | 18-09-1996 | Glaxo (India) Ltd. | Inclusion into Index |
Nifty 50 | 18-09-1996 | Mahindra & Mahindra Ltd. | Inclusion into Index |
Nifty 50 | 18-09-1996 | Nestle India Limited | Inclusion into Index |
Nifty 50 | 07-05-1997 | Mahanagar Telephone Nigam Ltd. | Inclusion into Index |
Nifty 50 | 14-05-1997 | Bharat Heavy Electricals Ltd. | Inclusion into Index |
Nifty 50 | 14-05-1997 | Hindustan Petroleum Corporation Ltd. | Inclusion into Index |
Nifty 50 | 24-12-1997 | Bharat Petroleum Corporation Ltd. | Inclusion into Index |
Nifty 50 | 07-10-1998 | Bank of India | Inclusion into Index |
Nifty 50 | 07-10-1998 | Cipla Ltd. | Inclusion into Index |
Nifty 50 | 07-10-1998 | Hero Honda Motors Limited | Inclusion into Index |
Nifty 50 | 07-10-1998 | Infosys Technologies Limited | Inclusion into Index |
Nifty 50 | 07-10-1998 | NIIT Ltd. | Inclusion into Index |
Nifty 50 | 07-10-1998 | Procter & Gamble India Ltd. | Inclusion into Index |
Nifty 50 | 07-10-1998 | Smithkline Beecham Consumer Healthcare Ltd. | Inclusion into Index |
Nifty 50 | 26-05-1999 | Dr. Reddy’s Laboratories Ltd. | Inclusion into Index |
Nifty 50 | 26-05-1999 | Novartis India Ltd | Inclusion into Index |
Nifty 50 | 26-05-1999 | Reckitt & Colman India Ltd. | Inclusion into Index |
Nifty 50 | 08-09-1999 | Britannia Industries Ltd. | Inclusion into Index |
Nifty 50 | 08-09-1999 | Satyam Computer Services Ltd. | Inclusion into Index |
Nifty 50 | 10-05-2000 | Dabur India Ltd. | Inclusion into Index |
Nifty 50 | 24-05-2000 | HCL Infosystems Ltd. | Inclusion into Index |
Nifty 50 | 24-05-2000 | Zee Telefilms Ltd | Inclusion into Index |
Nifty 50 | 01-09-2000 | Digital Equipment (india) Ltd. | Inclusion into Index |
Nifty 50 | 17-01-2002 | Sun Pharmaceutical Industries Ltd. | Inclusion into Index |
Nifty 50 | 17-01-2002 | Wipro Ltd. | Inclusion into Index |
Nifty 50 | 25-01-2002 | ICICI Bank Ltd. | Inclusion into Index |
Nifty 50 | 31-05-2002 | Videsh Sanchar Nigam Ltd. | Inclusion into Index |
Nifty 50 | 10-10-2002 | Shipping Corporation of India Ltd. | Inclusion into Index |
Nifty 50 | 28-10-2002 | Bharat Petroleum Corporation Ltd. | Inclusion into Index |
Nifty 50 | 28-10-2002 | HCL Technologies Ltd. | Inclusion into Index |
Nifty 50 | 02-05-2003 | Gas Authority of India Limited | Inclusion into Index |
Nifty 50 | 02-05-2003 | National Aluminium Co. Ltd. | Inclusion into Index |
Nifty 50 | 04-08-2003 | Steel Authority of India Ltd. | Inclusion into Index |
Nifty 50 | 01-03-2004 | Bharti Tele-Ventures Ltd. | Inclusion into Index |
Nifty 50 | 01-03-2004 | Maruti Udyog Limited | Inclusion into Index |
Nifty 50 | 12-04-2004 | Oil & Natural Gas Corporation Ltd. | Inclusion into Index |
Nifty 50 | 24-05-2004 | Punjab National Bank | Inclusion into Index |
Nifty 50 | 10-12-2004 | Larsen & Toubro Ltd. | Inclusion into Index |
Nifty 50 | 25-02-2005 | Tata Consultancy Services Ltd. | Inclusion into Index |
Nifty 50 | 26-09-2005 | Jet Airways (India) Ltd. | Inclusion into Index |
Nifty 50 | 27-06-2006 | Suzlon Energy Ltd. | Inclusion into Index |
Nifty 50 | 27-06-2006 | Siemens Ltd. | Inclusion into Index |
Nifty 50 | 01-09-2006 | Reliance Communications Ltd. | Inclusion into Index |
Nifty 50 | 04-04-2007 | Reliance Petroleum Ltd. | Inclusion into Index |
Nifty 50 | 04-04-2007 | Sterlite Industries (India) Ltd. | Inclusion into Index |
Nifty 50 | 24-09-2007 | NTPC Ltd. | Inclusion into Index |
Nifty 50 | 05-10-2007 | Unitech Ltd. | Inclusion into Index |
Nifty 50 | 12-12-2007 | Idea Cellular Ltd. | Inclusion into Index |
Nifty 50 | 12-12-2007 | Cairn India Ltd. | Inclusion into Index |
Nifty 50 | 14-03-2008 | DLF Ltd. | Inclusion into Index |
Nifty 50 | 14-03-2008 | Power Grid Corporation of India Ltd. | Inclusion into Index |
Nifty 50 | 10-09-2008 | Reliance Power Ltd. | Inclusion into Index |
Nifty 50 | 12-01-2009 | Reliance Capital Ltd. | Inclusion into Index |
Nifty 50 | 27-03-2009 | Axis Bank Ltd. | Inclusion into Index |
Nifty 50 | 17-06-2009 | Jindal Steel & Power Ltd. | Inclusion into Index |
Nifty 50 | 22-10-2009 | Jaiprakash Associates Ltd. | Inclusion into Index |
Nifty 50 | 22-10-2009 | IDFC Ltd | Inclusion into Index |
Nifty 50 | 08-04-2010 | Kotak Mahindra Bank Ltd. | Inclusion into Index |
Nifty 50 | 01-10-2010 | Sesa Goa Limited | Inclusion into Index |
Nifty 50 | 01-10-2010 | Dr. Reddy’s Laboratories Ltd. | Inclusion into Index |
Nifty 50 | 01-10-2010 | Bajaj Auto Ltd. | Inclusion into Index |
Nifty 50 | 25-03-2011 | Grasim Industries Ltd. | Inclusion into Index |
Nifty 50 | 10-10-2011 | Coal India Ltd. | Inclusion into Index |
Nifty 50 | 27-04-2012 | Asian Paints Ltd. | Inclusion into Index |
Nifty 50 | 27-04-2012 | Bank of Baroda | Inclusion into Index |
Nifty 50 | 28-09-2012 | Lupin Ltd. | Inclusion into Index |
Nifty 50 | 28-09-2012 | UltraTech Cement Ltd. | Inclusion into Index |
Nifty 50 | 01-04-2013 | IndusInd Bank Ltd. | Inclusion into Index |
Nifty 50 | 01-04-2013 | NMDC Ltd. | Inclusion into Index |
Nifty 50 | 27-09-2013 | Wipro Ltd. | Inclusion into Index |
Nifty 50 | 28-03-2014 | Tech Mahindra Ltd. | Inclusion into Index |
Nifty 50 | 28-03-2014 | United Spirits Ltd. | Inclusion into Index |
Nifty 50 | 19-09-2014 | Zee Entertainment Enterprises Ltd. | Inclusion into Index |
Nifty 50 | 27-03-2015 | Idea Cellular Ltd. | Inclusion into Index |
Nifty 50 | 27-03-2015 | Yes Bank Ltd. | Inclusion into Index |
Nifty 50 | 29-05-2015 | Bosch Ltd. | Inclusion into Index |
Nifty 50 | 28-09-2015 | Adani Ports and Special Economic Zone Ltd. | Inclusion into Index |
Nifty 50 | 01-04-2016 | Aurobindo Pharma Ltd. | Inclusion into Index |
Nifty 50 | 01-04-2016 | Bharti Infratel Ltd. | Inclusion into Index |
Nifty 50 | 01-04-2016 | Eicher Motors Ltd. | Inclusion into Index |
Nifty 50 | 01-04-2016 | Tata Motors Ltd DVR | Inclusion into Index |
Nifty 50 | 31-03-2017 | Indiabulls Housing Finance Ltd. | Inclusion into Index |
Nifty 50 | 31-03-2017 | Indian Oil Corporation Ltd. | Inclusion into Index |
Nifty 50 | 26-05-2017 | Vedanta Ltd. | Inclusion into Index |
Nifty 50 | 29-09-2017 | Bajaj Finance Ltd. | Inclusion into Index |
Nifty 50 | 29-09-2017 | Hindustan Petroleum Corporation Ltd. | Inclusion into Index |
Nifty 50 | 29-09-2017 | UPL Ltd. | Inclusion into Index |
Nifty 50 | 02-04-2018 | Bajaj Finserv Ltd. | Inclusion into Index |
Nifty 50 | 02-04-2018 | Grasim Industries Ltd. | Inclusion into Index |
Nifty 50 | 02-04-2018 | Titan Company Ltd. | Inclusion into Index |
Nifty 50 | 28-09-2018 | JSW Steel Ltd. | Inclusion into Index |
Nifty 50 | 29-03-2019 | Britannia Industries Ltd. | Inclusion into Index |
Nifty 50 | 27-09-2019 | Nestle India Ltd. | Inclusion into Index |
Index Name | Event Date | Scrip Name | Description |
Nifty 50 | 18-09-1996 | Chambal Fertilizers & Chemicals Ltd. | Exclusion from Index |
Nifty 50 | 18-09-1996 | Hero Honda Motors Limited | Exclusion from Index |
Nifty 50 | 18-09-1996 | Apollo Tyres Ltd. | Exclusion from Index |
Nifty 50 | 18-09-1996 | Indian Aluminium Co. Ltd. | Exclusion from Index |
Nifty 50 | 18-09-1996 | Madras Refineries Ltd. | Exclusion from Index |
Nifty 50 | 18-09-1996 | Nagarjuna Fertilizers & Chemicals Ltd. | Exclusion from Index |
Nifty 50 | 07-05-1997 | Brooke Bond Lipton India Ltd. | Exclusion from Index |
Nifty 50 | 14-05-1997 | SCICI Ltd. | Exclusion from Index |
Nifty 50 | 14-05-1997 | Dr. Reddy’s Laboratories Ltd. | Exclusion from Index |
Nifty 50 | 24-12-1997 | Essar Gujarat Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Thermax Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Andhra Valley Power Supply Co. Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Ashok Leyland Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Bharat Petroleum Corporation Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Indo Gulf Corporation Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Mangalore Refinery & Petrochemicals Ltd. | Exclusion from Index |
Nifty 50 | 07-10-1998 | Ponds (India) Ltd. | Exclusion from Index |
Nifty 50 | 26-05-1999 | Arvind Mills Ltd | Exclusion from Index |
Nifty 50 | 26-05-1999 | Great Eastern Shipping Company Limited. | Exclusion from Index |
Nifty 50 | 26-05-1999 | Reliance Capital Ltd. | Exclusion from Index |
Nifty 50 | 08-09-1999 | Industrial Finance Corporation Of India Ltd. | Exclusion from Index |
Nifty 50 | 08-09-1999 | Indian Rayon & Industries Ltd. | Exclusion from Index |
Nifty 50 | 10-05-2000 | TVS Suzuki Ltd. | Exclusion from Index |
Nifty 50 | 24-05-2000 | EIH Ltd. | Exclusion from Index |
Nifty 50 | 24-05-2000 | Industrial Development Bank of India Limited | Exclusion from Index |
Nifty 50 | 01-09-2000 | Bank of India | Exclusion from Index |
Nifty 50 | 17-01-2002 | HCL Infosystems Ltd. | Exclusion from Index |
Nifty 50 | 17-01-2002 | Kochi Refineries Ltd. | Exclusion from Index |
Nifty 50 | 25-01-2002 | Reckitt Benckiser (India) Ltd | Exclusion from Index |
Nifty 50 | 31-05-2002 | ICICI Ltd. | Exclusion from Index |
Nifty 50 | 10-10-2002 | Reliance Petroleum Ltd. | Exclusion from Index |
Nifty 50 | 28-10-2002 | Procter & Gamble India Ltd. | Exclusion from Index |
Nifty 50 | 28-10-2002 | Asian Paints Ltd. | Exclusion from Index |
Nifty 50 | 02-05-2003 | Novartis India Ltd. | Exclusion from Index |
Nifty 50 | 02-05-2003 | Castrol (India) Ltd. | Exclusion from Index |
Nifty 50 | 04-08-2003 | Nestle India Limited | Exclusion from Index |
Nifty 50 | 01-03-2004 | GlaxoSmithkline Consumer Healthcare Ltd. | Exclusion from Index |
Nifty 50 | 01-03-2004 | NIIT Ltd. | Exclusion from Index |
Nifty 50 | 12-04-2004 | Digital Globalsoft Ltd. | Exclusion from Index |
Nifty 50 | 24-05-2004 | Larsen & Toubro Ltd. | Exclusion from Index |
Nifty 50 | 10-12-2004 | Britannia Industries Ltd. | Exclusion from Index |
Nifty 50 | 25-02-2005 | Indian Hotels Co. Ltd. | Exclusion from Index |
Nifty 50 | 26-09-2005 | Colgate Palmolive (I) Ltd | Exclusion from Index |
Nifty 50 | 27-06-2006 | Shipping Corporation of India Ltd. | Exclusion from Index |
Nifty 50 | 27-06-2006 | Tata Chemicals Ltd. | Exclusion from Index |
Nifty 50 | 01-09-2006 | Tata Tea Limited | Exclusion from Index |
Nifty 50 | 04-04-2007 | Jet Airways (India) Ltd. | Exclusion from Index |
Nifty 50 | 04-04-2007 | Oriental Bank of Commerce | Exclusion from Index |
Nifty 50 | 24-09-2007 | Dabur India Ltd. | Exclusion from Index |
Nifty 50 | 05-10-2007 | Indian Petrochemicals Corporation Ltd. | Exclusion from Index |
Nifty 50 | 12-12-2007 | Mahanagar Telephone Nigam Ltd. | Exclusion from Index |
Nifty 50 | 12-12-2007 | Hindustan Petroleum Corporation Ltd. | Exclusion from Index |
Nifty 50 | 14-03-2008 | Glaxosmithkline Pharmaceuticals Ltd. | Exclusion from Index |
Nifty 50 | 14-03-2008 | Bajaj Auto Ltd | Exclusion from Index |
Nifty 50 | 10-09-2008 | Dr. Reddy’s Laboratories Ltd. | Exclusion from Index |
Nifty 50 | 12-01-2009 | Satyam Computer Services Ltd. | Exclusion from Index |
Nifty 50 | 27-03-2009 | Zee Entertainment Enterprises Ltd. | Exclusion from Index |
Nifty 50 | 17-06-2009 | Reliance Petroleum Ltd. | Exclusion from Index |
Nifty 50 | 22-10-2009 | Tata Communications Ltd. | Exclusion from Index |
Nifty 50 | 22-10-2009 | National Aluminium Co. Ltd. | Exclusion from Index |
Nifty 50 | 08-04-2010 | Grasim Industries Ltd. | Exclusion from Index |
Nifty 50 | 01-10-2010 | Unitech Ltd. | Exclusion from Index |
Nifty 50 | 01-10-2010 | Idea Cellular Ltd. | Exclusion from Index |
Nifty 50 | 01-10-2010 | ABB India Ltd. | Exclusion from Index |
Nifty 50 | 25-03-2011 | Suzlon Energy Ltd. | Exclusion from Index |
Nifty 50 | 10-10-2011 | Reliance Capital Ltd. | Exclusion from Index |
Nifty 50 | 27-04-2012 | Reliance Communications Ltd. | Exclusion from Index |
Nifty 50 | 27-04-2012 | Reliance Power Ltd. | Exclusion from Index |
Nifty 50 | 28-09-2012 | Steel Authority of India Ltd. | Exclusion from Index |
Nifty 50 | 28-09-2012 | Sterlite Industries (India) Ltd. | Exclusion from Index |
Nifty 50 | 01-04-2013 | Siemens Ltd. | Exclusion from Index |
Nifty 50 | 01-04-2013 | Wipro Ltd. | Exclusion from Index |
Nifty 50 | 27-09-2013 | Reliance Infrastructure Ltd. | Exclusion from Index |
Nifty 50 | 28-03-2014 | Jaiprakash Associates Ltd. | Exclusion from Index |
Nifty 50 | 28-03-2014 | Ranbaxy Laboratories Ltd. | Exclusion from Index |
Nifty 50 | 19-09-2014 | United Spirits Ltd. | Exclusion from Index |
Nifty 50 | 27-03-2015 | DLF Ltd. | Exclusion from Index |
Nifty 50 | 27-03-2015 | Jindal Steel & Power Ltd. | Exclusion from Index |
Nifty 50 | 29-05-2015 | IDFC Ltd | Exclusion from Index |
Nifty 50 | 28-09-2015 | NMDC Ltd. | Exclusion from Index |
Nifty 50 | 01-04-2016 | Cairn India Ltd. | Exclusion from Index |
Nifty 50 | 01-04-2016 | Punjab National Bank | Exclusion from Index |
Nifty 50 | 01-04-2016 | Vedanta Ltd. | Exclusion from Index |
Nifty 50 | 31-03-2017 | Bharat Heavy Electricals Ltd. | Exclusion from Index |
Nifty 50 | 31-03-2017 | Idea Cellular Ltd. | Exclusion from Index |
Nifty 50 | 26-05-2017 | Grasim Industries Ltd. | Exclusion from Index |
Nifty 50 | 29-09-2017 | ACC Ltd. | Exclusion from Index |
Nifty 50 | 29-09-2017 | Bank of Baroda | Exclusion from Index |
Nifty 50 | 29-09-2017 | Tata Motors Ltd DVR | Exclusion from Index |
Nifty 50 | 29-09-2017 | Tata Power Co. Ltd. | Exclusion from Index |
Nifty 50 | 02-04-2018 | Ambuja Cements Ltd. | Exclusion from Index |
Nifty 50 | 02-04-2018 | Aurobindo Pharma Ltd. | Exclusion from Index |
Nifty 50 | 02-04-2018 | Bosch Ltd. | Exclusion from Index |
Nifty 50 | 28-09-2018 | Lupin Ltd. | Exclusion from Index |
Nifty 50 | 29-03-2019 | Hindustan Petroleum Corporation Ltd. | Exclusion from Index |
Nifty 50 | 27-09-2019 | Indiabulls Housing Finance Ltd. | Exclusion from Index |
Polarisation:
Usually when market become too obsessed with one theme it tends to ignore everything else. Eg. In dotcom bubble all the money was chasing IT stocks and ignoring everything else, in 2007 most money was chasing power, construction and real estate developer stocks and ignoring FMCG, Pharma & IT. Similarly at the moment there are innumerable sectors and stocks which are at attractive valuations and hold good promise. I don’t know when & what will trigger the rotation of money from defensives stocks to other undervalued stocks, but it will happen. Prashant Jain of HDFC MF who saw both the turns in 1999 and 2007 and positioned his portfolio accordingly has very low allocation to defensive and high allocation to Cyclicals at this moment. S Naren of ICICI pru who also foresaw 2007 bubble, 2013 real estate bubble and 2017 mid/smallcap bubble also holds a similar view. Many veteran investors like Ramesh Damani, Vijay Kedia and Manish Chokasi are also suggesting the same inspite of having almost 100% of their portfolio in defensive sectors.
Most of the fund managers will align their portfolios sooner or later to benefit from this turn, some already have done that. It’s imperative to have a well-diversified portfolio which includes value category funds along with midcap & smallcap category funds in the portfolio.
Just as we have seen in the past 2-3 years Nifty/Sensex go up without similar improvement in your mutual fund portfolio, in the next 2-3 years you will see your portfolio go up much more than Nifty/Sensex. The reason why Index will underperform is because the heavy weights in the index will underperform other stocks. It’s not like 2017 where we were worried about return of capital, here we are talking of opportunity cost which can be significant. When Cyclicals start to perform their performance is not measured in percentages its measured in multiple of capital. We will know the exact turning point but we have to build positions in cyclicals which are at dirt cheap valuations and have patience. Such opportunities come rarely.
Nifty Stock-by-Stock weights in Jan 2008 vs Dec 2010: Look at how dramatically the composition has changed.
2008 | 2019 | ||
Stock | Weight | Stock | Weight |
Reliance | 12.15% | Reliance | 10.63% |
ONGC | 7.13% | HDFC Bank | 10.35% |
Bharti Airtel | 5.49% | HDFC | 7.6% |
NTPC | 5.45% | ICICI Bank | 6.11% |
SBI | 4.61% | TCS | 4.98% |
ICICI Bank | 4.29% | Kotak Mahindra Bank | 4.84% |
Reliance Comm | 4.17% | HUL | 3.54% |
L&T | 3.59% | ITC | 3.02% |
BHEL | 3.40% | L&T | 2.52% |
SAIL | 2.99% | Axis Bank | 2.55% |
Infosys | 2.89% | Bajaj Finance | 2.32% |
TCS | 2.88% | Asian Paints | 2.06% |
HDFC | 2.71% | Bharti Airtel | 2.03% |
ITC | 2.48% | SBI | 1.75% |
Reliance Petroleum | 2.41% | HCL Tech | 1.70% |
Unitech | 2.10% | Maruti Suzuki | 1.68% |
Wipro | 2.08% | M&M | 1.14% |
HDFC Bank | 1.87% | Nestle | 1.09% |
Tata Steel | 1.82% | Titan Company | 1.08% |
Sterlite | 1.78% | Sun Pharma | 1.06% |