Large-cap stocks the next winners? For investors seeking potential winners in the equity market, a focus on large-cap stocks may be worthwhile. According to an ET analysis, approximately half of the Nifty50 stocks, including prominent names like Reliance Industries, Tata Consultancy Services, Infosys, Tata Consumer, and Hindustan Unilever, have exhibited underperformance in comparison to the Nifty benchmark over the last two years.
Analysts assert that when the market rebounds from its current weakness, large-cap stocks are likely to outshine their smaller counterparts. This is attributed to the perceived overstretching of valuations in mid-cap and small-cap stocks.
Notable stocks such as Wipro, HDFC Life Insurance, Infosys, LTI Mindtree, Kotak Mahindra Bank, Bajaj Finserv, TCS, Reliance Industries, HCL Technologies, HDFC Bank, Hindustan Unilever, and Tata Steel have witnessed declines ranging from 5% to 39% in the past two years. During the same period, the Nifty index recorded an 11% increase, while the Nifty Midcap 100 and Smallcap 250 indices surged by approximately 29%.
Sanjeev Prasad, co-head of Kotak Institutional Equities, expressed optimism, stating, “We find much better value in top large-cap stocks and expect them to outperform in the next 6-12 months, as the current euphoria in other large-, mid- and small-cap stocks may fade over time, and their valuations realign with their fundamentals.”

India’s most valuable stock in terms of market capitalization, Reliance Industries, experienced a nearly 6% decline over the past two years. Bloomberg consensus estimates suggest a potential 22% gain for the stock within a year.
Consumer giant Hindustan Unilever, which faced a 5% decline over two years, holds the potential for a 15% rally in a year, according to Bloomberg consensus estimates. During the same timeframe, HDFC Life Insurance shares declined by 15%, while Infosys and LTI Mindtree shares saw 14% declines.

Siddhartha Khemka, head of research-retail at Motilal Oswal Financial Services, highlighted that while not all underperforming stocks will necessarily rebound, those with expected earnings growth, particularly in the consumer sector, are anticipated to show signs of recovery soon. Conversely, the information technology sector may take an additional one to two quarters for a full recovery.