Fairval

Notes on Indian equities, sectors and economy

Sensex leaders are all exhausted

Posted by fairval on October 21, 2007

Was checking some data, and came across this intriguing set of numbers. These are the top 10 companies in the BSE Sensex. Together, they account for 65% weight in the index.

Now check the sixth column. Barring one, Reliance Comm, all the others have fallen more from their peaks than the Sensex. Now, part of the explanation has to be that all of them did not peak the day Sensex peaked. Infy is one such example. IT companies have fallen over the last few months with the rupee rise. So these companies did not participate in the last run of the Sensex.

Yet, I am at a loss for explanations. All Sensex leaders are more off their peaks than the Sensex itself.

This seems to suggest a temporarily spent market. Different companies have taken the market lead at various points (and this is perhaps natural). The last 3000 points or so, was largely Reliance Group companies, and maybe a little bit of L&T and Bharti. At this point, it appears none of them are ready to lead the market, given how they are off their peaks more than the market.

The contenders in this lot may be Infosys and the banks for market support or revival. Of course, the exchanges can try the other trick as well – get a DLF into the index, and hope it can lead the next round of rally.

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