The recent sell-off in IT stocks such as Infosys and Tata Consultancy Services (TCS) has resulted in a sharp decline in the IT sector's weightage in the Nifty50 index, a report by Business Standard stated.
It pointed out that the sector’s weight in the index has slipped to a five-year low of 12.2 percent, down from 17.7 percent at the end of March 2022.
The combined market capitalisation of the big five IT companies – TCS, Infosys, Wipro, HCL Tech and Tech Mahindra – is down 8.2 percent since the start of 2023 compared to a 2.7 percent decline in the Nifty50 index during the period, noted the report.
The five stocks ended Thursday with a combined m-cap of ₹22.2 trillion, down from the ₹24.2 trillion at the end of December and the ₹23.7 trillion at the end of March this year, it informed.
It further observed that the combined m-cap is down 28.3 percent in the past 15 months from a record high of ₹31 trillion at the end of December 2021. For comparison, the benchmark index is up 1.6 percent during the period.
With the recent decline, the IT sector has given way to FMCG (fast-moving consumer goods) companies and the index is now the third-biggest component of the benchmark index, slightly ahead of the oil and gas sector, highlighted BS.
FMCG companies such as Hindustan Unilever, ITC, Asian Paints, Nestle, and Britannia together have a 12.6 percent weighting in the Nifty50, up 270 basis points since March 2022, it stated.
Also, banks, non-banking financial companies, and insurance companies (BFSI) remain at the top with 37.3 percent, up from 34.5 percent at the end of March 2022. Other big sectors to gain in the past one year include automobiles, and construction and infrastructure, informed BS.
The IT sector has now given up most of the gains in market capitalisation in the post-pandemic period and has become one of the biggest laggards on the bourses. However, the sector remains an outperformer on a longer-term basis. The combined market capitalisation of its top five is up 110 percent since the end of December 2017 compared to a 67.4 percent rise in the Nifty50 index during the period, it noted.