Bolstered by a revival of growth in the US economy and the steady appreciation in the dollar, Tata Consultancy Services’ (TCS) surging share price has seen the software firm take a clear leadership position in the market capitalisation charts, which is almost Rs 1 lakh crore higher that the that of its nearest rival — Reliance Industries Ltd (RIL). Just six months ago, RIL had a market cap higher than TCS.
On Monday, TCS, at its intra-day high price, recorded a market cap of Rs 3,67,272 crore even as RIL, at its intra-day high price, had a market cap of Rs 2,67,988 crore — the gap between the two at Rs 99,284 crore, just a whisker away from the Rs 1 lakh crore mark.
Based on their closing prices on Monday, the market cap gap between the two stood at Rs 94,744 crore, which means that the market cap of TCS is higher by over a third (35.7 per cent) of that of RIL.
Market experts say that this sort of gap between market capitalisations of the top firm and the second largest player is unprecedented in the history of the Indian stock markets.
Only six months ago, RIL had a higher market capitalisation than that of TCS. On February 1, 2013, RIL had a market cap of Rs 2,88,544 crore, which was Rs 25,000 crore higher than that of TCS at Rs 2,63,520 crore.
But since then, TCS had a sharp run following revival in the US economy, a significant depreciation in rupee and also good quarterly performance. The US market is the biggest market for TCS and other Indian IT firms.
“IT stocks are doing well as the outlook on US economy is turning positive and demand is expected to grow. The rupee depreciation is an additional advantage,” said Pankaj Pandey, head of research at ICICI Securities. “Also while there are talks of withdrawal of quantitative easing by US, IT as a sector will not be much affected by squeeze in liquidity as the sector does not need cash for expansion.”
RIL on the other hand has seen its growth stagnate over the last few years. While the government had issued a statement of intent to revise gas price and came out with a formula the company witnessed a jump in its share prices but then softened as the benefits are lower than what the markets expected and yet will a