Fall of market leaders! How 6 Nifty giants trapped investors with negative returns for 5 years
All of these stocks are market leaders in their sectors. Yet, each has struggled with a different mix of growth, valuation, margin and sector-specific problems.
TCS has been the worst performer in the list, falling 37% over five years. Infosys is close behind with a 34% decline. Both stocks were hit by old IT services growth model coming under pressure. Global clients have delayed discretionary technology spending, while artificial intelligence has raised questions over pricing, headcount-based billing and long-term demand for traditional outsourcing services.
Indian IT companies are being forced to rethink business models as clients demand more productivity and lower prices. The Nifty IT index has also lost about a fifth this year, with its 10 constituents losing $73 billion in market value.
Infosys has also faced company-specific pressure from weak guidance. The company’s FY27 constant currency revenue growth guidance of 1.5-3.5% had pointed to continued demand uncertainty, while another guidance cut after Q1 kept brokerages cautious. Analysts also flagged weak demand, AI-led pricing pressure and client-specific issues as near-term headwinds.
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Hindustan Unilever, down 23% in five years, shows how even a consumer staple stock can disappoint. The company has been dealing with weak rural demand, inflation pressure and rising competition. HUL’s shares had fallen to a 52-week low after the June quarter even though revenue growth touched a 13-quarter high, as investors worried about margin pressure from sustained cost inflation.The broader FMCG story has also changed. Inflation has hurt mass-market demand, while competition from regional players and large new entrants has kept pricing power under check. For a company that once commanded a premium for steady growth, slower volume recovery and margin pressure have made valuations harder to defend.
HDFC Life Insurance has fallen 18% over five years. The issue here has been slower growth and pressure on profitability metrics. The company’s June quarter showed value of new business rising 9% year-on-year (YoY) and annual premium equivalent also growing 9%, but individual APE remained muted, with underperformance in the bank channel. VNB margin declined 10 basis points YoY to 25%.
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Life insurers have also had to deal with regulatory changes, product mix shifts and pressure on savings products. For HDFC Life, investors have waited for stronger growth to justify its earlier premium valuation.
Asian Paints, down 13%, is another case where a high-quality franchise met a tougher market. Demand in decorative paints weakened, raw material costs rose, and competition intensified after the entry of Birla Opus.
Asian Paints had reported a sharp fall in quarterly profit in FY25 as muted demand and new competition hurt volumes. Its management had said it did not anticipate the intensity of competition because demand itself was weak and everyone was fighting for the same share.
The paint sector has also seen pressure from crude-linked raw material costs and rupee depreciation. Paint companies raised prices in 2026, but margins remained under pressure because raw material inflation stayed elevated and hikes were gradual.
HDFC Bank has been the least negative among the six, down 6.47% in five years, but its underperformance has hurt because it was once treated as one of India’s most reliable compounders. The main issue has been the merger with HDFC Ltd. The merger increased the bank’s balance sheet sharply but brought a smaller deposit base, putting pressure on margins and returns.
The absorption of HDFC added Rs 7.23 lakh crore of assets but a relatively small deposit base, squeezing margins and dragging on growth. The stock also saw pressure after leadership-related concerns and boardroom strains earlier this year.
Analysts say the merger also pushed the bank’s credit-deposit ratio to elevated levels, forcing it to rely on costlier deposits and borrowings. Analysts said this pulled net interest margins down from pre-merger levels.
The common thread across these six stocks is that investors had paid heavy price for certainty. Many of these companies traded at rich valuations for years because they were seen as stable, predictable and difficult to disrupt. When growth slowed, competition increased or margins came under pressure, the stocks had little room for error.
Largecaps still seen as safe bets
Still, there is a general consensus that largecaps remain the safer part of the market for many long-term investors. They have stronger balance sheets, deeper management teams, better access to capital and higher liquidity than smaller companies.
India’s equity market now appears to be moving from a valuation-driven phase to an earnings-led one. The recent correction has improved risk-reward for long-term investors in some parts of the market.
Anil Rego, MD and Chief Investment Officer at Right Horizons PMS, said the worst of the valuation-led correction may be behind the market, while a broader earnings recovery could support the next leg of growth.
He remains constructive on financials, manufacturing and industrials, autos, power and renewable energy, and consumer discretionary. Rego said investors should take a bottom-up approach and look for businesses where earnings growth is not yet fully reflected in valuations.
Data: Ritesh Presswala
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
