InvestorQ : I just read that HDFC Bank has now become the most valuable company on the Nifty in place of Reliance? Is that correct? What about TCS?
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I just read that HDFC Bank has now become the most valuable company on the Nifty in place of Reliance? Is that correct? What about TCS?

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shrinidhi Rajan answered.
4 months ago
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Let me clarify that Reliance still remains the most valuable company on the Nifty in terms of market capitalization. What has changed is the weight in the Nifty. Let me explain.

· Reliance is still the most valuable company in the Indian market by market cap by a very huge margin and TCS and HDFC Bank are in second and third places.

· However, Reliance is no longer the company with the highest weightage in the Nifty. That has now shifted from Reliance to HDFC Bank in the last few days.

· The weight of Reliance in the Nifty Index slipped from a high of 15% at the peak in the last quarter of 2020 to 9.82% currently.

· This weight shift has happened because Reliance has corrected from higher levels and also because other stocks like TCS, Infosys and HDFC Bank have done well meanwhile.

· Against the 9.82% weight that Reliance has, HDFC now has a weight of 10.08% and it regains the mantle of heaviest on the Nifty as in the past.

· RIL corrected nearly 20% from its recent peak of over Rs.2300 while on the other hand HDFC Bank has rallied more than 50% in the last few months.

· You must also remember that Nifty is a free-float weighted index meaning the weightage will be based on non-promoter public holdings of shares.

· That normally tends to work against Reliance as the promoters hold 50% in the company and that automatically reducing its weight in the Nifty.

· HDFC Bank, on the other hand is largely held by the retail public and institutions and that gives it a higher float advantage in the Nifty weighting.

· TCS is still the second most heavy stock with Rs.12 trillion in market cap and is inching closer to the Reliance market cap.

· However, even in the case of TCS it has 76% promoter holding, which is held by Tata Sons and hence that negatively impacts its free-float market cap.

In a nutshell, RIL is still the most valuable Indian company followed by TCS and HDFC Bank. But HDFC Bank has overtaken the rest in Nifty weight.

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