THE RESILIENT BTE 500

THE CURRENT MOOD OF THE MARKET IS APTLY REFLECTED IN THE LATEST EDITION OF THE BT500 STUDY, AS THE COMBINED VALUATION OF THE TOP 500 COMPANIES ON THE LIST HAS RISEN. BUT THE GAINS HAVE NOT BEEN AS SPECTACULAR AS 2022, MIRRORING THE SENTIMENT OF INVESTORS

- ASHISH RUKHAIYAR

THE SECOND WEEK of October saw something curious happen. The Indian stock markets were in the doldrums after a strong September—both the benchmark S&P BSE Sensex and the Nifty 50 had touched their respective all-time highs that month.

But even as the domestic equity markets were facing headwinds on account of a combination of geopolitical and macroeconomic concerns, global financial major CLSA said it was raising its India portfolio allocation on account of factors like strong credit impulse, improving external balance dynamics, robust GDP and earnings per share (EPS) growth, increasing profitability, and a supportive macro outlook, among other things. The bullish note by CLSA came as a ray of optimism in an otherwise bearish month—October has been the worst month in CY2023 with the Sensex shedding nearly 3 per cent.

What was the reason for this dichotomy? Simply put, the Indian stock markets were witnessing a confluence of sentiments—persistent conviction in the long-term growth story and heightened volatility in the short-term leading to increasing uncertainty amongst the investing community. That, in a nutshell, also sums up the latest edition of the BT500 study—an exhaustive analysis that Business Today has done every year since 1992.

The cumulative growth in the valuations of the 500 biggest companies by market capitalisation has been subdued this year compared to last year, even though there have been more instances of firms registering a rise in their respective market capitalisations when compared to those whose valuations have shrunk. Some of the biggest companies on the BT500 list have seen their valuations erode even as their top line and bottom line rose, reflecting the jittery sentiments of investors.