Nifty evolution: How tech checked out

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There are two new entrants slated to enter the Nifty soon. But how have the Index components changed over the years?

Tracking the Nifty history -

Nifty being a pure market cap Index, it's a lot easier to count the rates. During 2004-2007, being the bull market period, which started in 2003, the Index went through certain changes.

The tech weight from its highs, has come down from 20% to 10%. It's not due too many tech stocks going out of the Index, it's infact, completely due to the underperformance of tech.

On the other hand, the weight of power and capital goods put together, has gone up from 6% to 19%, which is a three-fold increase. In a sense, these two sectors represent what has happened in the markets, specially in the last one year of trade, where power and capital good have completely taken over as leadership sectors from the IT stocks.

Bank weight consistly has been at 12% and auto weight has been between 4-6%, depending on the stock and sector performance.

Some moves that changed the index were -

In 2004, when tech had a weightage of 15% and pharma weighed about 7.5%, cap goods and power weighed just about 6%.

Then GSK and NIIT went out and their place was taken over by Bharti and Maruti .

Digital Global was replaced by ONGC , which was the time when oil became a very big sector and had a weight of about 19% and that was mainly because of ONGC.

That resulted in tech stocks weight falling to about 14.5% as ONGC squeezed tech's weight.

Reliance weight was about 8.3% when the Ambani fued was at its highest point.

Post which, TCS made its entry in 2005 on the Index, which is when tech again went up to 20%, its last highest weight.

After that Reliance demerged and the stock prices fell and Reliance's weight went to as low as 7.5%, its lowest in the last three years.

2006 and 2007 have been the years for most of the major changes. Part of the reason are stocks like Suzlon and Siemens , which contributed to the weight of power stocks.

Reliance Communication came in place of Tata Tea .

So by 2006-end, oil weight fell to 12% and telecom weight went up to 12% as a result of R-Comm inclusion.

With RPL and other stocks coming in, along with the rally of power and capital good stocks, power and capital goods put together now control 19.2% in the Index.

Apart from that 12% is coming from Reliance alone. Reliance by itself, as a stock, has more weightage than any sector.

And now, Idea and Cairn have come in the places of MTNL and HPCL , which won't change things too much, but the weights may go up slightly because Idea and Cairn have far more market cap that the other two companies.

And that's how the Nifty has evolved over the years.