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, ET BureauLast Updated: Sep 22, 2026, 06:01:00 AM IST

Synopsis

Over a five-year period, thirteen stocks within the Nifty index adversely affected its overall performance, resulting in negative returns for these specific laggards. Conversely, the Nifty 50 index itself witnessed gains. Had these underperforming stocks been excluded, the index's returns would have been significantly enhanced. Active mutual funds, benefiting from reduced exposure to these stocks, ultimately outperformed the Nifty 50, highlighting the advantage for actively managed funds during this timeframe.

Mumbai: Thirteen stocks that make up nearly a third of the Nifty have weighed heavily on the benchmark's performance over the past five years. The stocks, which account for 33.7% of the index, delivered an annualised return of negative 0.8% between September 2021 and August 2026, according to 360 One Wealth's study. The Nifty 50 returned 7.1% annually during this period, but excluding these 13 laggards, the return would have been 11%, said the study by Varuk Sikka, executive director of the firm.

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The biggest weights among these stocks are HDFC Bank, Reliance Industries, Infosys, Kotak Mahindra Bank and TCS, which together account for about 27% of the index. IT services companies including Infosys, TCS, HCL Technologies, Tech Mahindra and Wipro, which together make up 8.5% of the Nifty, were hurt by factors including AI-led pressure on the billable-hour model. HDFC Bank faced margin pressure following its merger, while regulatory changes weighed on HDFC Life. Consumer companies such as Hindustan Unilever and Asian Paints faced pressure from rising input costs and increased competition.

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This drag from a handful of heavyweight stocks also helped active mutual funds outperform the index, as many of them had lower exposure to these laggards. While Nifty 50 index funds returned 8.32% annually over the period, large-cap funds averaged 11.41%, flexi-cap funds 12.23% and multi-cap funds 16.30%, according to 360 One Wealth. Typical active schemes had 15-22% of their portfolios invested in the 13 stocks compared with about 34% for the index, with this underweight alone accounting for roughly 1.5-2 percentage points of their outperformance, the study showed.

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