These six stocks have dominated the Nifty 50 in the last ten years

Published: October 14, 2020 at 11:25 am

In this article, we present results from an analysis of the NIfty 50 portfolio over the last ten years. We find that the weight of the top five stock is currently the highest and six stocks dominate the top five positions.

We use the portfolio of Nippon India ETF Nifty BeEs as a proxy for the Nifty 50. Therefore the weights in the analysis only approximately mirror that of the Nifty due to expenses and tracking errors.

The six stocks that repeatedly figure in the top five of the NIfty are: (top five here means stocks with the top five weights). Recall the NIfty is a market-cap-weighted index. Higher the market cap, higher the weight. To learn more about how the Nifty is computed, see: Nifty 50 stocks with weights for October 2020

  1. Reliance Industries Ltd. (RIL)
  2. HDFC Bank Ltd.
  3. Infosys Ltd.
  4. ICICI Bank Ltd.
  5. ITC Ltd.
  6. Housing Development Finance Corporation Ltd.

Out of the 119 months studied, the no of times each stock has figured in the top five is tabulated below.

StockNo of months in the top 5 out of 119 months
Reliance Industries Ltd.104
HDFC Bank Ltd.91
Infosys Ltd.109
ICICI Bank Ltd.74
ITC Ltd.98
Housing Development Finance Corporation Ltd.110

Historical weights of top five Nifty 50 stocks

The following series of graphs show the historical weights of the above six stocks from Oct 2010 to Sep 2020.

Reliance Industries Ltd.

Historical weight of Reliance Industries in Nifty 50 from Oct 2010 to Sep 2020
Historical weight of Reliance Industries in Nifty 50 from Oct 2010 to Sep 2020

HDFC Bank Ltd.

Historical weight of HDFC Bank in Nifty 50 from Oct 2010 to Sep 2020
Historical weight of HDFC Bank in Nifty 50 from Oct 2010 to Sep 2020

Infosys Ltd.

Historical weight of Infosys in Nifty 50 from Oct 2010 to Sep 2020
Historical weight of Infosys in Nifty 50 from Oct 2010 to Sep 2020

ICICI Bank Ltd.

Historical weight of ICICI Bank in Nifty 50 from Oct 2010 to Sep 2020
Historical weight of ICICI Bank in Nifty 50 from Oct 2010 to Sep 2020

ITC Ltd.

Historical weight of ITC in Nifty 50 from Oct 2010 to Sep 2020
Historical weight of ITC in Nifty 50 from Oct 2010 to Sep 2020

Housing Development Finance Corporation Ltd.

Historical weight of Housing Development Finance Corporation Ltd. in Nifty 50 from Oct 2010 to Sep 2020
Historical weight of Housing Development Finance Corporation Ltd. in Nifty 50 from Oct 2010 to Sep 2020

The weights to a large extent reflect the fortunes of individual stock prices. We had earlier pointed out the return difference of Nifty 50 vs Nifty 50 Equal-weight index was at an all-time high! The March 2020 market crash destroyed two-year imbalance among Index stocks, but the problem quickly surfaced again: Do index fund returns depend upon just a few stocks (Concentration risk)?

The effect of just a few stocks doing well can be clearly seen from the total weight of the top five stocks which is currently the highest over the last ten years.

Total weight of top five Nifty stocks from Oct 2010 to Sep 2020
Total weight of top five Nifty stocks from Oct 2010 to Sep 2020

Index investors do not have to worry about these results. However, they must expect lower performance when the weights of the top few stocks decreases and the market homogenises at some unknown time in future.

In the last ten years, only 61 stocks have been part of the 50-stock index reflecting the reasonable stability of this stock universe and why this should be core part of a mutual fund or stock portfolio. More about the stocks that have left/entered the index in another article. If you would like to purchase this ten-year portfolio history in Excel format, you can contact me: letters [AT] freefincal.com

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] com
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