Stock markets in India trim losses to turn flat even as the Rupee fell 43 paise to hit a record low of 70.29 against the US dollar as concerns about Turkey’s economic woes spreading to other emerging markets such as India persisted. Losses are largely seen in realty stocks and metal stocks.

The BSE Sensex is trading down by 32 points and the NSE Nifty is trading down by 9 points. Meanwhile, the BSE Mid Cap index is trading up by 0.1% while, the BSE Small Cap index is trading up by 0.4%.

Notably, the Indian stock market has had a hard time of it in 2018.

But a look at the Sensex would suggest just the opposite. The BSE Sensex is up by 11.4% in the current year.

Sensex Return Skewed by Top 12 Stocks

The real picture can’t be further from the truth. Only 12 stocks are responsible for Sensex touching their lifetime highs. TCS, Infosys, Reliance along with a few other stocks have led to this outperformance.

The top 12 stocks have returned 25.5% on an average while the other 19 stocks in the Index have declined by 12% on an average.

Corporate governance issues at mid and small cap companies have led to their corrections from sky-high valuations a year ago.

Even among Sensex stocks, Tata Motors, Vedanta, and Bharti Airtel have performed poorly due to structural issues in their businesses.

What happens when the top 12 fail to meet the market’s expectations?

There is a strong possibility they might take down the other 19 stocks and the index further with them. In such a situation, despite the recent correction, mid and small caps won’t be safe either.

In the latest edition of our stock market podcast, I talk to Tanushree Banerjee, Co-head of Research, about how to invest in volatile markets like these. Have a question for Tanushree? Write in. Don’t miss it! Sign up for our free podcast today. Visit SoundCloud, iTunes or Stitcher.

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