ICICI Bank, HDFC Bank, ITC key for market rallies

The BSE Sensex has gained 12 per cent or 3,085 points since the note ban low in December 2016, powered by ITC, HDFC Bank, HDFC, Reliance Industries (RIL) and ICICI Bank. Together, they contributed 1,700 points to the surge.

Fast-moving consumer goods  major, ITC and private lenders, HDFC Bank and ICICI Bank have been key contributors in all the three recent 3,000-plus points (over 12 per cent gain) rallies of the Sensex. As all the three blue-chip companies have no promoter holding, their weight is high in the Sensex. The weight of Sensex components is based on free-float market capitalisation.

ICICI Bank, Infosys, HDFC Bank, ITC and Tata Motors were major drivers of the 12 per cent rally in the Sensex between February 29 and April 27, 2016. Similarly, a 15 per cent rally in the index from May 23 to September 8, 2016 was powered by HDFC, Tata Motors, ITC, ICICI and State Bank of India.  

While most of the top 10 contributors have been the same for each of three rallies, RIL, Tata Motors and Infosys have been components in each of these. 

Experts say if the market has to scale new highs, performance of banking stocks will be key, as they have the biggest sectoral weight. “Index heavyweights such as ITC, HDFC Bank, ICICI Bank are critical for any rally. Just like RIL this time, each rally has a unique driver. If the market has to go higher from here, there will have to be big contributions from stocks in pharma, auto and information technology sectors, which have been laggards,” said an expert.