Financial stocks have had a dominant run in the past decade and a half. In 2005, they weren’t even among the top five sectors when it came to their weighting in the Nifty index.
In 2009, private banks’ weighting in the index rose to 12.9 per cent, from just 5.4 per cent in 2005. Since then, it has only gone up. During the start of the year, private banks alone accounted for a fourth of the index weight.
If one added the weighting of NBFCs and PSBs, the weighting in the index would shot up to 42 per cent. However, the Covid-triggered market fall has hit the financial pack the hardest.
The weighting of the sector has come off from the peak of 42 per cent in December 2019 to less than 33 per cent. Given the underperformance of banking stocks, it could shrink further.
Meanwhile, stocks in the pharma, and consumer goods space have seen their weighting go up in the benchmark indices. On a stock specific basis, Reliance Industries has seen the highest increase in weighting.