Trade Nivesh : In the last two years, the difference between the market value of the largest company in a sector and the number two company has increased rapidly. The reason for this is that given the challenging environment, investors want to invest in stocks of big companies.
In the last two years, the top company has defeated the number two company by a big margin in terms of valuation in many sectors like IT, banking, auto and steel. Market experts believe that in a difficult time, there is no pressure on the biggest company in the sector to reduce margins and revenue.
For example, IT giant Tata Consultancy Services (TCS) has doubled its lead over its rival Infosys by market capitalization. Currently, TCS has a market capitalization of Rs 4.2 lakh crore more than Infosys, which was Rs 2.4 lakh crore in October 2017.
Similarly, HDFC Bank's market capitalization is more than 3.8 lakh crore rupees than ICICI Bank. Two years ago this gap was Rs 2.3 lakh crore. In this situation, the size of big companies is becoming even bigger.
"In volatile markets, investors see the largest company as safe bets," said Ravi Muthukashanam, head of research, institutional equities, Elara Securities. He said, "The earnings estimates for such shares become solid."
Its effect has also been seen in the difference of net profit. TCS earned a net profit of Rs 2,220 crore in FY 2016-17, while Infosys had a net profit of Rs 1,500 crore. TCS reported a net profit of Rs 3,006 crore and Infosys Rs 1,472 crore in the financial year 2018-19.
Gautam Dugad, head of institutional equities research at Motilal Oswal, said, "When there is a concern among investors in the market and economic growth is not seen broadly, then safety is given the highest priority."
In the last two years, the top company has defeated the number two company by a big margin in terms of valuation in many sectors like IT, banking, auto and steel. Market experts believe that in a difficult time, there is no pressure on the biggest company in the sector to reduce margins and revenue.
For example, IT giant Tata Consultancy Services (TCS) has doubled its lead over its rival Infosys by market capitalization. Currently, TCS has a market capitalization of Rs 4.2 lakh crore more than Infosys, which was Rs 2.4 lakh crore in October 2017.
Similarly, HDFC Bank's market capitalization is more than 3.8 lakh crore rupees than ICICI Bank. Two years ago this gap was Rs 2.3 lakh crore. In this situation, the size of big companies is becoming even bigger.
"In volatile markets, investors see the largest company as safe bets," said Ravi Muthukashanam, head of research, institutional equities, Elara Securities. He said, "The earnings estimates for such shares become solid."
Its effect has also been seen in the difference of net profit. TCS earned a net profit of Rs 2,220 crore in FY 2016-17, while Infosys had a net profit of Rs 1,500 crore. TCS reported a net profit of Rs 3,006 crore and Infosys Rs 1,472 crore in the financial year 2018-19.
Gautam Dugad, head of institutional equities research at Motilal Oswal, said, "When there is a concern among investors in the market and economic growth is not seen broadly, then safety is given the highest priority."
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