The gap in the returns turned in by the leading benchmark indices, the Nifty and the Sensex, this year, has reached its highest level in three years. While the 50-share Nifty has yielded 15.9% so far in 2012, the 30-share Sensex has managed to generate 13.8% in the period, trailing the former by 2.1%.
This difference, reported on Monday, is the highest since that seen on March 9, 2009, when the difference between the year to date returns of the Nifty lead that of the Sensex by 2.4%.
The primary reason for the Nifty?s outperformance could be the higher number of shares in the index compared to the Sensex, which makes it more diverse with wider representation from the banking, infrastructure, metal and cement space.
All together the 20 shares that are not present in the Sensex have accounted for 183 points or nearly one fourth of the Nifty?s year to date gains.
For example, banking stocks like Axis Bank, Kotak Mahindra Bank and Punjab National Bank have together contributed 60 index points in the year to date addition of 735 odd Nifty points.
IDFC is another financial institution that accounted for 21.66 Nifty points during the period as the stock has gained as much as 61% in 2012, so far.
Similarly, five stocks from the infrastructure and utilities sectors, including ADAG group companies R Infra and R Power, which are not present in the Sensex enhanced the Nifty?s performance by nearly 45 points.
Another sectoral representation, which has added to the Nifty?s performance, is that of cement. The presence of ACC and Ambuja Cement added 7 points to the Nifty?s year to date increase
One discrete stock swap in the Sensex since January 9 that has limited its performance is the replacement of JP Associate with GAIL.
With a 52% gain in its price, the former has added 11 points in the Nifty. Due to 8% decline in GAIL stock, it has cost 18 points in the year to date gain of the Sensex.
Even higher weights attached to some of the laggards in the Sensex compared to the Nifty has weighed on the Sensex. These include, stocks including Bharti, HUL, GAIL, Cipla and M&M.
If this trend continues, 2012 would be the second in three years when the Sensex has lagged behind the Nifty in yearly performance.
Earlier in 2010, the Nifty yielded 0.5% higher than the Sensex. However, since 1995, the sensex has outperformed the Nifty 9 times barring 2011 when both the indices lost similar 24.6%.
