Market watch: The concentrated market boom

These days, the S&P BSE Sensex is breaching its previous life-highs every next day, but the boom offers not too many reasons to cheer.

A look at the 30 stocks which make the market barometer reveals that the total market capitalisation of the index grew 16.9% in a year—from Rs 55.52 lakh crore on July 18 last year, to Rs 64.88 lakh crore on July 18 this year. While 13 of the 30 stocks saw an average annual fall of over 12%, four stocks saw a decline in the range of 10% to 25%. Tata Motors saw a 44.8% annual fall in its market capitalisation; from Rs 1.32 lakh crore last year, to Rs 72,732.3 crore on July 18.

Of the 17 companies that saw an annual growth in their market value, nine saw an annual growth of up to 25%, while seven saw an annual growth between 25% to 50%. Coincidentally, another Tata group company—Tata Consultancy Services—saw a 66.1% growth in its market value; from Rs 4.61 crore a year earlier to Rs 7.65 crore now.

Among the Sensex companies, Kotak Mahindra Bank and Hindustan Uniliver saw their market capitalisation grow by an annual 43.5% and 41.9% each. HDFC Bank and HDFC saw their market values swell by 32.8% and 28.9% each. Reliance Industries, the second company to have recently touched the $100 billion market capitalisation, has seen an annual 40% rise in market capitalisation.

Now that was for the larger companies, but the concentrations gets strikingly visible when we look at the broader S&P BSE 500 index. Here, 259 out of the 500 companies saw an annual decline in market value, which averaged at an eye popping 64.8%. Here, 13 companies saw an annual market value fall exceeding 50%, while 92 and 97 companies saw a market value dip in the range of 25% to 50% and 10% to 25% respectively. Kwality Limited, the New Delhi headquartered dairy products processor, saw the highest (90.4%) annual decline in market value from Rs 3,504.7 crore to Rs 337.9 crore.

In terms of gainers, 54 of the 500 companies saw their market value gain up to 10% in a year. Sixty companies saw a 10% to 25% and 25% to 50% annual growth in their market values. The S&P BSE 500 saw 43 companies with a market capitalisation growth between 50% to 100%, while 14 saw a 100% growth in market value. HEG Limited and Graphite India had a handsome run as global prices of graphite saw a strong run-up. While both stocks have been multibaggers in a year’s time, HEG saw a 908.8% market value jump from Rs 1,578.7 crore a year ago to Rs 15,925.6 crore now. Graphite India, on the other hand, saw a 466.5% growth in market value from Rs 3,389.8 crore to Rs 19,203.9 crore.

While the 14 companies with 100% growth have an average rise of 216.8%, the remaining 217 companies with a annual increase in market value have seen an average increase to 29.3% only.

Clearly, the market boom is largely concentrated in and lacks a broader base, and hence offers reasons to ponder over than cheering.