The Nifty soared once again on Friday to hit a new record high well past the 12,300 points mark. Indubitably, the rally has come from the "Big 4" stocks, that is Reliance Industries, HDFC, ICICI Bank and HDFC Bank.
These 4 stocks together have a 40 per cent weight in the Sensex and the remaining 26 stocks command a weight of 60 per cent.
Obviously, if these stocks move in one direction it pulls the market in that direction. This is precisely what has been happening in the market, where all these four stocks have been moving higher, thus taking the index to record highs.
In fact, there are reports that when HDFC Bank hits new highs, the Sensex too tends to follow. A lot of mutual funds have now moved their money into these 4 stocks and almost all of them figure in the top holdings of mutual funds.
If there is relentless buying in these stocks, it's likely to push the markets higher, no matter what. At the moment investors are not interested in the broader markets. This is especially true for mutual funds, who are continuing to invest heavily in these 4 stocks. Nobody at the moment has any idea when the broader markets would participate.