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Thirteen Nifty stocks dragged the index for five years — and active funds noticed

By Strota Newsroom · 2026-09-22 · How Strota reports

Thirteen Nifty stocks dragged the index for five years — and active funds noticed
NiftyHDFC BankInfosysTCSmutual fundsSensex
Names that make up 33.7% of the Nifty returned -0.8% a year from September 2021 to August 2026. Strip them out and the index would have done 11% instead of 7.1%, a 360 One Wealth study shows.

For five years a third of the Nifty barely earned its keep. A 360 One Wealth study, reported by the Economic Times, finds that thirteen stocks making up 33.7 percent of the index delivered an annualised return of minus 0.8 percent between September 2021 and August 2026. The Nifty 50 itself returned 7.1 percent a year. Strip those thirteen names out and the same stretch would have returned 11 percent.

That gap is not a trivia line. It is what happens when the heaviest names in a market-cap index stop compounding while the rest of the basket keeps moving. An index fund has to own them. An active manager can lean away. The study says that choice showed up in the scoreboard.

The biggest weights inside the laggard set are familiar household names: HDFC Bank, Reliance Industries, Infosys, Kotak Mahindra Bank and TCS. Together they are about 27 percent of the index. When names that large go sideways or down, the average investor who bought "the market" through a plain Nifty product felt a drag they could not see stock by stock on a monthly statement.

IT is the cleanest pocket of the problem. Infosys, TCS, HCL Technologies, Tech Mahindra and Wipro together are about 8.5 percent of the Nifty. The study ties their weak stretch to AI-led pressure on the old billable-hour model, the way Indian IT firms have long charged global clients for people-time. When clients pause projects or push for lower rates, those weights hurt the whole index, not only a sector fund.

Banking and consumer names carried their own weights. HDFC Bank faced margin pressure after its merger. HDFC Life was hit by regulatory change. Hindustan Unilever and Asian Paints dealt with higher input costs and sharper competition. None of those stories is exotic. They are the ordinary frictions of large franchises, amplified because the index refuses to shrink their size until the market does.

One Hindi business desk republishing the same study put hard weights and five-year compound returns on several of the names. HDFC Bank at 9.9 percent of the index showed a minus 1.3 percent CAGR, with net interest margin cited at a record-low 3.26 percent in the first quarter of FY27. Infosys at 3.7 percent weight showed minus 8.1 percent. TCS at 2.2 percent weight showed minus 8.7 percent. Reliance at 8 percent weight still managed a plus 4.5 percent CAGR, which is positive in isolation and still a drag versus what the rest of the market delivered.

An earlier related screen of six heavyweights, reported by News9, put the cumulative five-year price damage in plain percentages: TCS down about 37.01 percent, Infosys about 34.76 percent, Hindustan Unilever about 23 percent, HDFC Life about 18.36 percent, Asian Paints about 13 percent and HDFC Bank about 6 percent. Those are price paths, not the study's annualised basket math, but they explain why the conversation keeps returning to the same logos.

Active funds used the room the index does not have. Over the same period, Nifty 50 index funds returned 8.32 percent a year. Large-cap active funds averaged 11.41 percent, flexi-cap funds 12.23 percent and multi-cap funds 16.30 percent, according to 360 One Wealth figures in the Economic Times report. Typical active schemes held only 15 to 22 percent of their portfolios in the thirteen laggards, against about 34 percent for the index. That underweight alone was worth roughly 1.5 to 2 percentage points of outperformance.

The mechanism is boring and powerful. A free-float market-cap index is a popularity machine. Winners swell. Laggards shrink only slowly. If the swollen names stop delivering, every rupee forced into an index product keeps funding the drag. Active managers who simply owned less of those names did not need a genius forecast. They needed permission, and a mandate, to be wrong-sized versus the benchmark.

Tuesday's tape showed the same heavyweights still set the daily mood. On September 22 the Nifty closed at 23,329, down 85.30 points or 0.36 percent, snapping a four-day winning streak. The Sensex finished at 74,529.08, down 329.91 points or 0.44 percent. Nifty IT fell 0.86 percent, with HCL Technologies off 1.77 percent, TCS 1.13 percent, Infosys 0.98 percent and Tech Mahindra 0.51 percent. Mid-caps and small-caps slipped 0.08 percent and 0.23 percent. The day was not the five-year study. It was a reminder that the same sector still moves the needle.

Global colour around that session cut both ways. US markets had just seen the Nasdaq climb more than 2 percent to a record close, and South Korea's KOSPI rose nearly 2 percent with Samsung and SK Hynix in the lead. Brent crude eased toward about $98.66 a barrel on one desk's close quote. India still sold off at the open-to-close level because domestic IT and financial weights mattered more than the overnight cheer.

For a household the practical reading is narrower than a trading call. A plain Nifty index fund is a bet that the largest listed companies, in their current weights, will compound. When a third of those weights return minus 0.8 percent a year for five years, the product still "worked" at 7.1 percent, and still left several percentage points on the table versus a basket that avoided the dead weight. Active large-cap and flexi-cap averages in the study show what under-owning those names was worth in that window. Past windows do not bind the next one.

What the 360 One Wealth numbers establish is arithmetic, not destiny: thirteen stocks at 33.7 percent weight, minus 0.8 percent a year, an index at 7.1 percent that would have been 11 percent without them, and active funds that held 15 to 22 percent in the same names instead of about 34 percent. What they do not establish is which of those logos will still be the drag five years from now. Weights change. The rule that an index must own its giants does not.

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This story was written by the Strota Newsroom from publicly reported and publicly posted sources, drafted with AI assistance and checked against automated editorial-quality and accuracy gates, with human editorial oversight. Individuals who shared their experience on social media are not identified. See our editorial standards, sourcing and AI-use disclosure. Found an error? Tell us — we correct transparently.