Are India’s safest stocks quietly underperforming your portfolio?

A surprising share of India’s blue-chip stocks have given poor returns in the last three to five years, so investors need to rethink how they use these “safe” names in their portfolios.

About 23 out of 100 large BSE companies have given annualised returns of 5% or less over the last three years, and 21 over five years, even as the BSE 100 itself has returned around 9–10% and the Sensex 6–8% in the same period. Many of these underperformers are household names like Reliance Industries, TCS, HDFC Bank, Infosys, ITC, HUL, Asian Paints and Wipro, so this is not a small-cap issue but a blue-chip one. The weak group is largely from consumer, IT and BFSI, and this shows how sector cycles and changing demand can hurt even strong brands when valuations run ahead of earnings and growth slows.

Consumer firms are wrestling with slower rural demand and mixed discretionary spending, so earnings growth has been modest and rich valuations have capped returns. IT companies are dealing with cautious global clients and new pressures from AI, which impact pricing and margins, so even leaders like Infosys and TCS are expected to only modestly outperform peers instead of showing very strong growth. In BFSI, the story depends on how deposit and credit growth balance with margin changes after rate cuts and on asset quality, so the sector is in a transition phase and markets are watching outcomes instead of blindly rewarding size.

The good news is that nearly 20 of these 23 laggard stocks now trade below their three‑year average valuation multiples, so patience and selective buying can work if earnings and cash flows improve. Investors can focus on clear growth drivers, like RIL’s Jio monetisation, retail and FMCG scale‑up and new energy plans, or Havells’ and Avenue Supermarts’ expected stronger FY27 growth from better demand and business models. So, instead of chasing any blue‑chip, it helps to check sector trends, valuation versus history and company‑specific triggers, and build a diversified portfolio that mixes proven leaders with emerging growth stories.