The New Rich

There has been a reshuffle in the top order of India’s most valuable companies during the Sensex’s journey from 15K to 16K in the past two-and-a-half months. Riding on the back of realty and stock market boom, Delhi-based real estate giant DLF has taken a big leap to emerge among the top five companies in market-cap ranking.

The company, with a market-cap of Rs 1,27,097 crore as on Friday, has shot up to the fifth position from the eighth as on July 6, 2007, when the Sensex scaled 15,000 level for the first time. The investor wealth in DLF jumped by Rs 29,000 crore, or 30%, during the period.

In the past, realty stocks witnessed high volatile movements caused by fears of a correction in prices and slowdown in demand. These fears seem to have eased for the time being, which is reflected in the sharp rise in realty stocks including DLF. Analysts expect the Reserve Bank of India (RBI) to cut rates after the US Federal Reserve reduced interest rates by 50 bps this week.

This could result in home loan rates taking a dip. The BSE Realty index, which soared 580 points on Thursday, closed at a new high of 9,183, gaining 139 points, or 1.5%, on Friday.

Reliance Communications (RCL), ICICI Bank and public sector heavyweights Bhel and SAIL have all improved their positions. They are now ranked sixth, eighth, 10th and 12th, respectively, compared with seventh, ninth, 11th and 15th at 15-K levels. Their market caps range from Rs 79,655 crore to Rs 1,18, 455 crore currently.

The top four wealth creators, however, have maintained their positions during the 1,000-point rally. Reliance Industries continued to be the market-cap topper with Rs 3,16,940 crore, followed by ONGC, (Rs 1,97,495 crore), Bharti Airtel (Rs 1,74,276 crore) and NTPC (Rs 1,54,603 crore).

Despite a bullish market, India’s top-rung IT companies remained laggards in the wealth creation race as an appreciating rupee and fears of a slowdown in the US triggered concerns about the prospects of leading exporters like TCS, Infosys Technologies and Wipro.

Investors , in fact, have lost over Rs 30,000 crore in these companies. Their rankings have taken a beating, falling to ninth (fifth at 15K Sensex), seventh (sixth) and 17th (12th), respectively. “IT stocks have been on a decline since the beginning of 2007, driven by an appreciating rupee in the first half and concerns over a slowdown in the US economy,” said brokerage house JP Morgan in its report on the Indian IT sector.

The report also said that while the brokerage is not so worried about the rupee appreciation, the subprime crisis is a concern for the Indian IT sector. A slowdown in the US economy (or even in the financial sector) could have a significant negative impact on the Indian IT sector, the report said.