Sensex stopped relying on Reliance to surge ahead….So should you
Interesting…..Sensex has regained 20000 levels …last seen in January 2008…..but Index heavy weight Reliance Industries has actually lost ground since then !…..Sensex bypasses Reliance weightage hurdle to regain 20k levels
In January 2008 Reliance Industries reached a high of Rs 3252 on BSE while the Sensex soared to a High of 21205…..Reliance Industries is currently Rs 1032 while the Sensex has regained 20k levels…adjusting for a 1:1 Bonus in late 2009,Reliance Industries would be Rs 2064…..that’s a drop of over 36% and Rs 1188 from January 2008 Highs
Reliance Industries however hangs to it’s top position in Market Capitalisation…today it’s Rs 337941 crs…..but ONGC is near it….today ONGC closed at a Market Cap of near Rs 300000 crs….ONGC was at a high of Rs 1357 in January 2008 when Sensex hit record highs….Today it’s regained these levels and kisses Rs 1400….so it’s regained Market Cap levels……Reliance Industries’ decline in it’s Share Price has caused the decline in it’s Market Cap and helped ONGCs market cap come nearer it
An oft quoted school of thought expressed on Stock Channels on TV advises to buy Reliance as it has not participated in the Sensex rise at all…and the next Sensex rise would come from it’s weightage and it’s rise in it’s share price……….
While Reliance Industries remains a part of Core Segment in Clients Portfolios,I would urge readers of this blog to seek comforts of Valuation,rather than emotion….the emotion that Reliance has to rise if the Sensex has to rise…we’ve seen how this common,confess that I too held it,assumption belied in the past two years
So stop relying on Reliance to make Money…stop assuming that if the Sensex has to move up,heavyweight Reliance must move up first…..but if I’ve to throw the cat among the pigeons…then if Reliance Industries does rise,it would make the Sensex rise that much more easier and certain…….