6 companies join Rs 2 lakh crore M-cap club

HDFC and HUL are the latest entrants in the club

The number of companies with market capitalisation (m-cap) of over Rs 2-lakh crore has more than doubled in past eight months to 11 after the Narendra Modi led-Bhartiya Janata Party (BJP) came to power at the Centre on May 16, 2014.

In these eight months, four companies from financials - HDFC Bank, State Bank of India (SBI), ICICI Bank and HDFC - besides Infosys from the information technology (IT) sector and Hindustan Unilever (HUL) from the fast moving consumer goods (FMCG) sector have joined the elite club taking the total tally to 11. Tata Consultancy Services (TCS), ONGC, ITC, Reliance Industries and Coal India formed had a market-cap of over Rs 2-lakh crore as on May 16, 2014.

In contrast, during the peak of the previous bull market in 2008, there were only three companies - Reliance Industries, Oil and Natural Gas Corporation (ONGC) and NTPC - in this list.

Housing Development and Finance Corporation (HDFC), the country's largest mortgage financier company, and Hindustan Unilever (HUL), the fast moving consumer goods major has been the latest entrants in this market-cap club in the past six sessions.

"The overall sentiment is so strong that the Nifty and Sensex have reached their lifetime highs. In our view, the markets are now rallying on hopes of several reforms measures expected to be announced in the upcoming Union Budget. Further, quantitative easing liquidity from European and Japanese central banks is expected to have trickle-down effect on emerging markets like India in the wake of slowdown in the Chinese and Russian economies," said Dinesh Thakkar, chairman and managing director, Angel Broking.

The benchmark indices, which quoting at their lifetime high levels, have gained 21% since May 16 2014, the day the results of the Lok Sabha elections were announced. The Sensex crossed the 29,000 mark for the first time in history on Thursday.

Analysts at Nomura, too, remain bullish on the Indian markets with end - December Sensex target of 33,500.

"Our bullish stance on the Indian market for this year is based on our high conviction view that the improvement in India's macro environment over the past year is durable and will improve further. The lagged effect of the much needed complete overhaul of the political economy is a significant tailwind. The extent to which this is not yet priced in will provide upside to multiples, thus adding to market returns over and above earnings growth," said Prabhat Awasthi, managing director and head of equity research, Nomura Financial Advisory in a recent report.

Meanwhile, the number of companies having m-cap of more than Rs one-lakh crore increased to 21 from 17 on May 16 last year. Axis Bank, HCL Technologies, Maruti Suzuki India and Kotak Mahindra Bank have joined Rs one lakh crore market-cap club.

During the period, the overall m-cap of India's companies has swelled by Rs 22-lakh crore to Rs 102.95-lakh crore, of which the 21 companies with m-cap of more than Rs one-lakh crore account for 42 per cent.

Analysts remain optimistic on the road ahead for the banking and the non-banking financial services sector. Credit Suisse, for instance, estimates the Indian consumer finance market to witness an 18 per cent CAGR (compounded annual growth rate) to a $1.2 trillion opportunity by 2020.

While the market still remains underpenetrated, the organised players (banks and NBFCs) have developed diverse products targeted at all segments of the income pyramid, across multiple secured and unsecured loan types and suggest that consumer lending can be a significant growth driver for Indian financials in the coming years, Credit Suisse says. HDFC Bank, Axis Bank and IndusInd Bank remain their top banking picks.