The Nifty 500 gained 39.1% in FY24, and 17% since our last analysis of top Nifty500 contributors in October 2023. Higher government spending on infrastructure and railways has made Indian Railways Finance Corp. (IRFC), REC, and Larsen & Toubro the most consistent performers, taking them to the top 15 of highest Nifty500 contributors.
In the past month, the Nifty500 has been trading sideways as Nifty VIX, representing the market volatility, rose sharply by 50% over the same time period. What traders call the ‘fear gauge’ has been rising amid concerns that the ruling party may win fewer seats than initially expected.
In this edition of Chart of the Week, we look at the top 15 stocks that drove the Nifty500’s rise in FY24. These stocks accounted for 26.6% of the Nifty500’s 39.1% gain, which translated to an overall contribution of 10.4 percentage points.
To understand which were the top stocks that drove the surge in the index, we tracked the change in market capitalization for stocks in the Nifty500 and compared it to the total change in the index market cap.
PSU stocks increase their contribution to the Nifty500 index
Among the 15 stocks on our list, three belong to the public sector, specifically the banking and finance domain. Within this sector, IRFC and REC represent financial institutions, while the Life Insurance Corporation of India is from the life insurance industry. The top performer among the three, IRFC rose 458% in FY24, contributing 3.4% to Nifty500’s gains. Meanwhile, LIC of India and REC registered gains of 70.7% and 295.3% in the past fiscal year driving the Nifty500 higher by 1.7% and 1.4% respectively.
Hindustan Aeronautics, a defence company, has risen sharply by 153.2% in the past fiscal year, contributing 1.4% to Nifty500’s gains. The company reported revenue growth of 11% YoY to Rs 29,810 crore in FY24 benefiting from the government’s defence outlay in the budget, which rose by 13% YoY to Rs 5.9 lakh crore in FY24. UBS expects the company’s order book to triple to Rs 2.4 lakh crore by FY26, from that of Rs 80,000 crore at the end of FY23.
Meanwhile, construction company Larsen & Toubro witnessed a 76.4% rise in FY24, contributing 1.6 percentage points to Nifty500’s annual gain. This growth was fueled by the government’s increased infra spending, with a 33% higher allocation of Rs 10 lakh crore for capex in the infrastructure sector in the FY24 budget. In addition, order inflow from international markets from the hydrocarbon and infrastructure segment in Saudi Arabia and the Middle East also boosted its growth.
Reliance and Bharti Airtel gain from market consolidation in the telecom space
In FY24, the oil and gas company Reliance Industries’ share price increased 32.2%, contributing 2.6% to the Nifty500’s overall gain. The company’s EBITDA for FY24 increased 16.1% YoY to Rs 1,78,677 crore, driven by significant growth in its retail and telecom divisions.
Similarly, telecom company Bharti Airtel saw its share price rise by 64.2% in FY24, contributing 1.8% to Nifty500’s gains. The company’s consistent market share expansion and organic improvements in average revenue per user have boosted the company’s profit margins. The company also stands to benefit from a probable tariff hike post-election in H1FY24, as indicated by Chairman, Sunil Bharti Mittal.
Meanwhile, IT major Tata Consultancy Services added 1.4% to Nifty500 as its share price surged 24.4% over the past fiscal year. In FY24, the company witnessed a 25.2% YoY increase in deal wins, with a total contract value amounting to USD 42.7 billion.
Top Adani Group companies surge to pre-Hindenburg levels
Three Adani group companies have made it to the top 15 list, as they rise above pre-Hindenburg levels. The three stocks, namely Adani Enterprises, Adani Ports & SEZ, and Adani Power witnessed impressive gains of 99.7%, 126.1%, and 207.1% respectively in FY24.
However, this surge was also due to a lower base after a substantial correction in the share prices of Adani Group stocks, after allegations from Hindenburg Research that accused Gautam Adani of stock manipulation and accounting fraud.
Even though Adani claimed that the accusations were false, the conglomerate is making an effort to address issues highlighted in the report by repaying debt and reducing promoter share pledges. Investments from GQG Partners, and securing projects such as Dharavi redevelopment have also played to their advantage.
Rising consumer demand drives realty and auto stocks higher
DLF, a realty company, gained 157% in FY24, helping drive Nifty500 higher by 1.4% in the fiscal. This was led by a demand surge for residential properties across top cities in India. The company sold 1,113 luxury apartments priced above Rs 7 crore in Gurugram, generating Rs 7,200 crore in just three days after launch.
In the automobile space, high demand drove Bajaj Auto and Tata Motors' share prices higher by 141% and 147% contributing 1.5% and 2% respectively to Nifty500’s gains in FY24. Meanwhile, rising discretionary spending and the introduction of platform fees fueled Zomato’s share price growth of 262% in FY24. This resulted in the company’s contribution of 1.7% to Nifty500’s gains in the past fiscal year.
