Nifty reclaims 11,000

• Nifty 50 has reclaimed the 11,000-mark after a gap of more than 4 months. It had hit the mark last on 6th March 2020
• However, only a handful of Nifty heavyweights have accounted for bulk of the gains
• Nifty has reached its pre-COVID (March 6th) levels but only 19 out of  50 stocks have given positive returns (listed below). The remaining 31 stocks are still in negative territory.

How have Nifty constituents moved in FY21?

• The Nifty has returned about 28% since April 1, 2020. Out of this, the top 6 by weights (Reliance Industries, HDFC Bank, HDFC, Infosys, ICICI Bank, TCS) accounted for nearly 60% of the move.  
• Reliance Industries (up 72%), Infosys (41%), HDFC Bank (up 28%), HDFC (up 10.58%), TCS (up 21%) which account for 42% of the Nifty’s weightage have been at the forefront of Nifty's rally in FY21.

INDwealth Analysis

• Given high levels of uncertainty, there has been a flight-to-quality, leading to the polarization in the markets. 
• One of the primary reasons for this rally is excess liquidity in the system. The gradual opening of the economy is also a contributing factor. However, we are nowhere out of the woods. There are still serious risks in the economy. 
• A major trend that can be seen from the list of stocks that have gained is that mainly 4 sectors have gained i.e. Telecom, IT, Pharma and FMCG. Covid-19 has created huge demand for IT services and pharmaceuticals. Telecom sector has been a major beneficiary. We remain bullish on all of these sectors. 
• Our VGQM Model is currently Neutral on the Nifty50 Index. 
• Invest in equities in a staggered manner. Keep your SIP’s running. Stick to large caps and index stocks that are best suited to navigate the economic crisis.