InvestorQ : Can Explain the polarization !!! if we Exclude these polarized stocks what would be the real Nifty level , what message we getting through this polarization ??
Balaji made post

Can Explain the polarization !!! if we Exclude these polarized stocks what would be the real Nifty level , what message we getting through this polarization ??

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Crowny Pinto answered.
1 year ago
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Polarization means how just a handful of stocks actually drove the Nifty to new highs. During the year 2019, the Nifty gave returns of around 13% while the Sensex gave returns of around 14%. But these returns were just led by a handful of stocks while most of the other stocks underperformed. Consider these facts.

· During the year the Nifty gained a total of 1306 points but the top 10 stocks actually gained 1589 points during the year.

· Within the Nifty, a total of 24 stocks actually gave negative returns and they made a negative contribution of (-440 points) during the year.

· The table below captures how the handful of 10 stocks actually accounted for all the positive returns and more on the Nifty, while the rest of them were either flat or destroyed value overall.

Stock Name

Points Contributed to Nifty

Percentage return in 2019

Reliance Industries Ltd.

333

35.3%

ICICI Bank Ltd.

283

49.8%

HDFC Bank

234

20.9%

HDFC

187

23.0%

Kotak Mahindra Bank

146

35.8%

Infosys Ltd.

95

14.9%

Bajaj Finance Ltd.

94

61.0%

TCS Ltd.

87

18.0%

Bharti Airtel Ltd.

72

56.8%

Axis Bank Ltd.

59

20.8%

The table above explains how the markets have got polarized with most of the returns being focused on just about 10 stocks. This also called the kurtosis of market returns.

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