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The Stocks That Consistently Beat The Sensex

As an equity frenzy sparks concerns, here's a list of consistent wealth creators.

<div class="paragraphs"><p>A bronze bull statue stands at the entrance of the BSE building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)</p></div>
A bronze bull statue stands at the entrance of the BSE building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

India’s equity benchmarks are scaling new records, buoyed by ample liquidity, institutional flows and expectations of improved earnings as the economy recovers from the pandemic’s upheaval.

In the last one year, the S&P BSE Sensex and the Nifty 50 have gained about 50% each. The surge has been broad-based and valuations have spiked.

The Sensex’s valuation premium over MSCI Emerging Markets Index has spiked to 2 times in October from 1.4 times a year earlier.

There are other worries as well, from a pullback in easy money to inflation.

ICICI Securities said in a report that an increase beyond $80 a barrel for crude is a macro risk for Indian equities because of its impact on the trade deficit and inflation, and it’s reflected in the depreciating rupee and rising bond yields.

The market has so far shrugged off concerns.

Of the 3,652 stocks listed on BSE for which price data is available, 87% have risen in the last one year.

As Rahul Chadha of Mirae Asset Global Investments Co. puts it: "People think it is almost too easy to come every morning and make some money.”

While this exuberance is driving a broad surge in equity markets, select stocks have been consistent performers irrespective of short-term concerns or triggers.

BloombergQuint’s analysis of BSE500 threw up a list of such companies that have beaten the benchmark Sensex in six months to five years consistently.

Criteria

  • BSE500 stocks included.

  • Should have returned at least twice the Sensex gains in 6-month, and one-, three- and five-year periods.

  • Tracked by at least five analysts.

  • The 10 largest names by market cap that gave highest five-year returns and also consistently beat the Sensex.

Mindtree Ltd., Astral Ltd. and Bajaj Finance Ltd. are among the top three stocks that have given the highest returns in the last five years and consistently beaten the benchmark over multiple time frames.

Most of these stocks have already surpassed their target prices. The analysts may revise the targets after factoring in the second-quarter earnings performance.