From SBI to JSW Steel, a dozen Nifty stocks hit lifetime highs in May

A dozen Nifty50 stocks have hit a lifetime high this month. These include State Bank of India, Wipro, Bajaj Finserv, Tata Steel, and JSW Steel. IT companies dominate the list of stocks that hit lifetime highs this year, followed by banks and financial services.

Analysts said investor interest in the IT sector stocks was driven by the fact that the industry saw little impact from Covid-19. Similarly, banks with better asset quality or improved asset quality have helped improve the sector’s representation in the stocks that hit their lifetime highs.

Except for SBI, the rest of the pack comprises of private sector banks like HDFC Bank, ICICI Bank, and Kotak Mahindra Bank.

Analysts said more Nifty stocks could touch records as large-cap will play catch-up with the rally in broader markets. The small-cap indices have posted their best performance in four years. And there are concerns that small-cap valuation is stretched. And if this trend continues, more index stocks can hit their lifetime highs.

Close to half-a-dozen stocks from metals and cement sectors also hit their lifetime highs this year.

Except for PowerGrid, SBI, and SBI Life, no other public sector undertaking (PSU) has hit lifetime high this year. The other PSUs in the index hit their lifetime highs more than three years back.

The underperforming PSU stocks include BPCL, IOCL, ONGC, Coal India and NTPC. There are worries that oil majors will have to take a margin hit if crude oil prices go up further. 

The inability to grow profits and lack of interest from foreign funds that invest in accordance with environmental, social, and corporate governance mandates have also dampened investor appetite for these stocks, said market players.

The inability to leverage their balance sheets and diversify into growth areas is another reason for the lack of enthusiasm. Strategic disinvestment and buybacks to improve their balance sheets could see re-rating in PSU majors, analysts added.