The Pros and Cons of Index Concentration

Today’s Daily Byte

Today’s market movement was beyond anyone’s expectations. Most people thought we were just buying time with the Nifty consolidating and waiting for a trigger to move up. However, the market decided otherwise, with the Nifty soaring like a rocket, reaching a new high with a 400-point move.

We’ll delve into the main story in the video : is casino gambling more rewarding than trading?

Reading Time : 4 Minutes

The Pros and Cons of Concentration

A recent chart from Bloomberg highlights a surprising trend in the S&P 500. As of June 30, 2023, the five largest stocks in the index—Microsoft, Apple, Nvidia, Alphabet, and Amazon—constitute almost 29% of the total index weight.

This is a significant concentration, considering that the remaining 495 stocks make up the other 71%.

This level of concentration hasn’t been seen since 1964 when the top five stocks made up 27.6% of the index.. . . . .

Reading Time : 4 Minutes

Domestic Ownership taking over

In recent years, the landscape of ownership in the Indian stock market has shifted significantly.

Data from Whiteoak Capital Mutual Fund reveals that Foreign Institutional Investor (FII) ownership has decreased from around 22% a decade ago to nearly 18%. Meanwhile, Domestic Institutional Investor (DII) ownership has grown from 10.3% to 16.8%.

This change has nearly closed the gap between FIIs and DIIs, which was once around 12% and is now less than 2%.. . . . .

Reading Time : 3 Minutes