The Indian stock market’s extreme reliance on simply a single stock virtually makes top-heavy US equities look wholesome.
A 164 per cent surge in Reliance Industries (RIL) — India’s largest stock by market capitalisation — accounted for about 43 per cent of the benchmark Sensex’s rally since equities bottomed on March 23. In comparability, the so-called FAANG shares within the US made up 22 per cent of the S&P 500’s surge throughout the identical interval, based on the info compiled by Bloomberg.
Owned by Asia’s richest man Mukesh Ambani, the oil-refining main has seen its market worth almost double to greater than $200 billion this 12 months after a main push into digital and e-commerce ventures gained it a flurry of investments with Facebook, Google, and different giants. RIL now has a 17 per cent weighting on the Sensex, up from 10 per cent a 12 months in the past, and has propelled the measure up 50 per cent because the March low.
The weighting of RIL has additionally change into a downside for the nation’s actively-managed funds as they hit a regulatory restrict for holding a single stock. This means money managers can’t add rising shares and subsequently, threat trailing the market, based on Kotak Asset Management Co.