SALMAN's six-pack steals HRITHIK's thunder on Dalal Street

NEW DELHI: Rising risk aversion to IT counters in the wake of downgrades, and a sharp correction in the banking stocks has led to the outperformance of SALMAN's six-pack against HRITHIK's seven sublime stocks.

SALMAN is an abbreviation of six stocks, namely State Bank of India (SBI), Axis Bank, Larsen & Toubro, Maruti Suzuki India, Adani Ports and Special Economic Zone and NTPC that have delivered up to 21 per cent returns in the year 2022 so far.

On the other hand, HRITHIK is an acronym for seven bluechips -- HDFC twins, Reliance Industries, ICICI Bank, Tata Consultancy Services, Infosys and Kotak Mahindra Bank that have posted a muted performance so far in the current calendar year.

According to market experts, Indian markets are under pressure amid lofty valuations, FII selling, geopolitical worries, rising inflation and monetary tightening by the central banks.

"This is a bear market, not a correction. Bear market has happened in many stocks. It would be best if we could say that it is a bear market which will get over in a few months," Samir Arora, Founder, Helios Capital said in an interaction with ET NOW.

Data compiled from corporate database AceEquity shows that SALMAN stocks have outperformed HRITHIK stocks, both in terms of return and wealth erosion.

Interestingly, HRITHIK stocks have almost half the weightage in the Nifty50 index, but only two of them - Reliance Industries and Kotak Mahindra Bank - have delivered positive returns on a year-to-date (YTD) basis.

On the contrary, only two SALMAN stocks - Axis Bank and Larsen & Toubro - have failed to reward investors.

One should note that HRITHIK stocks are inclined towards IT and financial sectors, whereas SALMAN stocks are generally less volatile, and have seen a slow and steady upmove in price.

Among HRITHIK stocks, Infosys has emerged as the biggest wealth destroyer as the counter is down by 20 per cent since December 31. The scrip, which settled at Rs 1,889.65 on Tuesday, has wiped out Rs 1.56 lakh crore from investors' kitty.

Merger bound HDFC twins have tumbled between 11-15 per cent since the beginning of the year, leading to a cumulative decline of Rs 1.61 lakh crore in the market cap.

Despite such a sharp correction, Marcellus Investment Managers Founder Saurabh Mukherjea has come out in defence of the merger and sees the development as extremely positive.

“The HDFC-HDFC Bank merger is a fitting finale to crown Deepak Parekh’s career as India’s smartest capital allocator. The combined entity will be value accretive for both sets of shareholders and it has ensured that the succession planning for HDFC is taken care of,” said Marcellus in a newsletter last month.

Another IT major Tata Consultancy Services has plunged about 8 per cent during the period, wiping off m-cap by Rs 1.2 lakh crore. Private lender ICICI Bank has declined 4 per cent, chopping off more than Rs 20,000 crore in terms of m-cap.

"Be very defensive and be a bit more overweight on some of the consumer staples and pharma and some of the private sector banks over the next 6 to 12 months," said Girish Pai, Head of Research, Nirmal Bang Institutional Equities. "I would probably be underweight in IT and NBFCs."

On the other hand, four SALMAN stocks, including SBI, Maruti Suzuki, Adani Ports and NTPC - cumulatively added more than Rs 42,600 crore to investors' pocket, of which Rs 25,500 crore was from NTPC alone, which has zoomed 21 per cent so far in 2022.