Wipro, Bajaj Finance, Infosys: Sensex at all-time high but these index stocks need up to 92% rally to revisit highs

Sensex might have hit its record high level after a gap of seven months, at least half of the index constituents require at least 10 per cent surge to revisit their respective record high levels. They include stocks of IT majors Wipro Ltd, Tech Mahindra Ltd and Infosys Ltd, NBFCs Bajaj Finance Ltd and Housing Development Finance Corporation Ltd and banks such as Kotak Mahindra Bank Ltd and State Bank of India.

At Wednesday's close of Rs 385.55, shares of Wipro required a 91.88 per cent rally to revisit its all-time high of Rs 739.80 hit on October 14, 2021. The average target price on this stock at Rs 389 suggests no upside potential ahead.

For Tech Mahindra to revisit its all-time high of Rs 1,837.75 (December 30, 2021), the stock required 64.12 per cent rally from Wednesday's closing price of Rs 1,119.70. Tech Mahindra’s average target price of Rs 1,094 suggests a 2 per cent potential downside for the stock.

IndusInd Bank and Infosys are two other stocks from the Sensex pack that needed at least 50 per cent rally to reclaim their all-time high levels. IndusInd Bank at Rs 1,286.75 required 58 per cent surge to reclaim a high of Rs 2,037.90 hit on August 3, 2018. Infosys, on the other hand, required 50.12 per cent jump over Wednesday's price to revisit Rs 1,953.70 level that it touched on January 17, 2022. The two stocks have average targets suggesting 13-15 per cent potential upside.

The BSE Sensex hit a new high of 63,588.31 on Wednesday, crossing the previous all-time high of 63,583 hit in December last year. The pace of the rally has slowed down over the last few weeks but the underlying momentum is still strong, said Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities.

"We are just months away from India and US elections. We believe the positive momentum should continue as governments generally tend to do everything in their control to keep the market participants happy in order to be re-elected to power," he said.

Last year, global markets had corrected, discounting a US recession early this year, its impact on global growth and corporate earnings. "But that didn’t happen and markets are compensating for the overreaction of last year, In India, a sustained rally beyond the record highs is difficult since valuations are rich. A further rally, beyond a point, will not have fundamental support," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Amar Ambani, Head of Institutional Equities at YES Securities said Sensex's earnings kicker will come from expansion in margins, as companies keep some part of the gain from falling input costs, and strong results from banks and NBFCs. Valuations, he said, are not demanding at 15.5 times FY25 EPS. "If monsoons don’t play spoiler, 2023 will be a strong year for Indian equities. A lot of money is on the sidelines and the carry trade is playing out from Japan. FPI money should keep flowing into India, with expected stable yields and healthy rupee outlook,” he said.

Tata Steel (34 per cent), NTPC (29 per cent), Bajaj Finserv (27 per cent), Tata Consultancy Services (24 per cent), Kotak Mahindra Bank (22 per cent) and

Sun Pharmaceutical Industries (21 per cent) are some other Sensex constituents that needed at least 20 per cent rise to touch their respective record high levels.

HCL Technologies, HDFC, Bajaj Finance, Reliance Industries and State Bank of India are some other stocks that required 10-17 per cent rise to revisit their record levels.