How Nifty laggards kept the index in check over the past one year

Tuesday marked a breather for investors as today's session ended on a positive note for the benchmark indices. While the Nifty 50 gained 140.20 points, or 0.57% to 24,821.10, underneath the relief rally, the cracks in the index continue to persist. Over 60% of the index constituents have underperformed on a year-on-year (YoY) basis, dragging the momentum downwards. NSE’s data also indicates that the Nifty 50 index itself has not seen much change over the year. Compared to July 2024, the index stood at 24,834.85, and it closed at 24,821.10 in today’s session.

A deep dive into the 50 constituents of the Nifty index elaborates on the stalemate performance. According to Capitaline data, 32 companies traded in the red. Out of those, the top five stocks that changed the momentum to bearish were IndusInd Bank (-43%), Tata Motors (-39.24%), Tata Consultancy Services (TCS) (-29.71%), Oil & Natural Gas Corporation (ONGC) (-27.90%), and Coal India (-26.13%).

The leader of the laggards is IndusInd Bank, whose share price nosedived by 43% to Rs 802, from last year's Rs 1411.50. This plunge was due to the bank getting caught amidst major accounting discrepancies earlier this year. The discrepancies were worth Rs 2,600 crore, leading to top bosses resigning immediately after that, which fuelled investors’ concerns. ONGC and Coal India's performance dipped due to lowered production, geopolitical tensions resulting in price volatility, and a drop in seasonal demand.

Even on a one-month basis, 34 out of the Nifty 50 companies, too, have spiralled down. While Trent leads the negative trend with -18.6%, the IT pack consisting of HCL Technologies , Tech Mahindra , and TCS follows in a similar suit, each down by 14.31%, -13%, and -10.9%, respectively. The news of TCS laying off 2% of its global workforce, amounting to 12,000 in headcount, has been fanning investors’ negative sentiments in the other IT heavyweights. Even the share prices of Wipro and Infosys dipped by nearly 6% in a month.

Yet the market pulse remains mixed, indicating that investors have their picks, which are still gaining on the scrip. Eternal, Zomato ’s parent company, made its debut in March this year, and saw a 35% YoY rise and 17% increase within a month. Even with companies like ICICI Bank and Cipla both showing positive trends on a monthly and YoY basis, others like Hindustan Unilever and Sun Pharma are making up for the losses incurred throughout the year.

Further analysis suggests that even those companies that have performed well overall on the benchmark index, their performances are getting squared off by the weakened heavyweights of the Nifty 50. As per NSE’s Indexogram dated June 30, 2025, the top companies that contribute by weightage are HDFC Bank (13.19%), ICICI Bank (8.91%), Reliance Industries (8.79%), Infosys (4.99%), Bharti Airtel (4.74%), Larsen & Toubro (3.73%), ITC (3.35%), TCS (3.06%), Axis Bank (2.97%) and Kotak Mahindra Bank (2.75%).

Therefore, considering HDFC Bank’s 8.54% positive YoY change, its July performance has been up by a meagre 0.47%, thereby pulling the overall benchmark index down, cancelling ICICI’s assistance in keeping the index floating. Similarly, Infosys and TCS contribute to the bearish trend as they both constitute 8% of the total weightage. As Eternal was recently added to the top 50 in March this year as a part of NSE’s bi-annual reconstitution, its weightage data is not available. It can be considered that while it zooms past its peers, its contribution by weightage gets negated by the heavyweights.

In the sector-wise weightage breakdown, financial services contribute 37.41%, 11.21% by IT, and 10.38% by oil, gas & consumable fuels. 10 out of 12 banks and NBFCs—which are a part of the Nifty —are trading in red. In the oil and gas segment too, Coal India, ONGC and even Reliance Industries have not performed well on the scrip both on a one-month and YoY basis, with the latter seeing a dip by 7.38% in its performance since June 29.

Such heavyweights not performing according to market expectations are taking away the piece of action by the companies having a smaller slice in the benchmark index. Fundamental sectoral shifts or global tailwinds could possibly take away the burden of the underperformance of the heavyweights before they drag the 50-company-constituent index into a tight corner.