IT weight in Nifty 50 hits 26-year low; oil & gas sector reclaims top spot

Investors confront reversal as decade-long IT rally unwinds, reshaping Nifty's sector hierarchy

A sharp selloff in shares of information technology (IT) services companies such as Tata Consultancy Services (TCS), Infosys, Wipro, and HCLTech has caused their weighting in the country’s benchmark equity index to fall to a 26-year low. The IT services sector’s weighting in the Nifty 50 index declined to 8.8 per cent on Friday, down from 11.7 per cent at the end of March last year and the pandemic high of 16.2 per cent in March 2021. This is the sector’s lowest weighting since March 1999, when it accounted for just 7.1 per cent of the index. 

The industry first entered the Nifty 50 in the second half of 1998 with Infosys and NIIT. Currently, five IT services companies are part of the index, led by Infosys with a 3.97 per cent weighting, followed by TCS at 2.27 per cent. With this decline, the IT sector has slipped behind the oil and gas sector, which includes Reliance Industries, to become the third-largest sector in the index. The oil and gas sector now accounts for 9.2 per cent of the index, down from 9.8 per cent at the end of March last year. 

This marks the first time in six years that the IT sector will no longer be the second-largest contributor to the benchmark index. The banking, financial services and insurance (BFSI) sector continues to dominate, with a 36.5 per cent weighting in the Nifty 50, up from 35.6 per cent at the end of March last year. 

The sharp fall in IT sector weighting in the current financial year (2025-26) largely reflects underperformance relative to the broader market. The Nifty IT index, which tracks the free-float market capitalisation of the country’s 10 largest listed IT companies, is down 11.4 per cent since the end of March last year, compared with an 8.3 per cent rise in the Nifty 50 over the same period. Similarly, the Nifty IT index is down 13.7 per cent since the start of the calendar year, compared with a 2.5 per cent decline in the Nifty 50. 

The Nifty IT index is now nearly 26 per cent below its all-time month-end high of 43,338 at the end of December 2024, while the Nifty 50 is down just 2.8 per cent from its record high of 26,203 in November 2025. On Friday, the IT Index closed at 32,681, down 1.44 per cent for the day, while the Nifty 50 ended at 25,478.9, down 1.3 per cent. Following the recent selloff, IT companies have surrendered all the excess returns delivered to shareholders after the pandemic boom. 

Between 2011 and 2019, the Nifty IT index moved largely in tandem with the benchmark, with both indices rising around 120 per cent during that period. A sharp breakout in 2020 and 2021, stoked by the pandemic and the resulting digitisation and automation of office work, pushed IT sector revenues and profits higher. The Nifty IT index spiked 203 per cent between March 2020 and December 2021, compared with a 102 per cent rise in the Nifty 50. Since then, however, all those extra gains have been erased. The Nifty IT index is down 16 per cent since December 2021, while the Nifty 50 has risen 47 per cent over the same period. This marks the longest and largest underperformance of the IT sector on Indian stock exchanges since its debut in the Nifty 50 in 1998.