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Nifty50 Rejig: Tracking The Rise And Fall Of Index Titans

20 February 20246 mins read by Angel One
This article delves into the dynamic composition of the Nifty 50 Index, exploring the weight changes witnessed by its constituents between July 2023 and January 2024.
Nifty50 Rejig: Tracking The Rise And Fall Of Index Titans
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Shifting Weights: Winners and Losers

The table below showcases the top 10 Nifty 50 constituents ranked by weightage in January 2024, along with their weightage in July 2023 and the change:

Company Name Weightage (%) Change (Basis Points)
2024 2023
HDFC Bank Ltd. 11.57 14.10 -253.00
Reliance Industries Ltd. 10.16 9.87 29.00
ICICI Bank Ltd. 7.59 7.99 -40.00
Infosys Ltd. 6.24 5.54 70.00
Larsen & Toubro Ltd. 4.33 3.71 62.00
ITC Ltd. 4.12 4.70 -58.00
Tata Consultancy Services Ltd. 4.07 4.01 6.00
Axis Bank Ltd. 3.12 2.99 13.00
Bharti Airtel Ltd. 3.12 2.56 56.00
Kotak Mahindra Bank Ltd. 2.83 3.12 -29.00

As evident, HDFC Bank witnessed the most significant downgrade in weightage, shedding a sizable 2.53%. This could be attributed to various factors, such as profit booking post-rally or changes in investor sentiment. ITC and ICICI Bank also experienced reductions in weightage, albeit to a lesser extent.

On the flip side, Infosys emerged as the biggest upward mover, climbing 70 basis points. This growth likely reflects investor confidence in the company’s prospects amid the continued strength of the IT sector. Reliance Industries, Bharti Airtel, and Larsen & Toubro also saw noteworthy increases in their weightage within the index.

Nifty 50 Shuffle: HDFC Bank’s Lead Shrinks, Others Step Up

The top two players in the Nifty 50, Reliance and HDFC Bank, are getting closer in terms of their weightage within the index. In July 2023, HDFC Bank held a clear lead with a 4.23% weight difference over Reliance. However, by January 2024, this gap shrunk to just 1.21%.

This means that while HDFC Bank remains the top dog in terms of weightage, its dominance is lessening. Movements in Reliance’s stock price will now have a slightly bigger impact on the overall Nifty 50 movement compared to before.

This shift isn’t just about the top two. Other notable names like Infosys, ICICI Bank, Bharti Airtel, and Larsen & Toubro have all gained weight within the index, filling the space left by the slight downgrades of HDFC Bank, ITC, and Kotak Mahindra Bank.

Understanding the Shifts: A Broader Perspective

These weight changes within the Nifty 50 offer valuable insights into the evolving market dynamics. The downgrades of HDFC Bank, ITC, and ICICI Bank could indicate profit-taking or shifting investor preferences towards other sectors. Conversely, the upgrades of Infosys, Reliance Industries, Bharti Airtel, and Larsen & Toubro signify growing investor interest in these companies, potentially driven by their future growth prospects or recent performance.

It’s crucial to remember that these weight changes are not static. The Nifty 50 undergoes periodic rebalancing, ensuring its composition reflects the broader market reality. Investors following the index can anticipate these adjustments and adapt their investment strategies accordingly.

Conclusion

The weight changes within the Nifty 50 highlight the constant flux of the Indian stock market. Understanding these shifts can empower investors to make informed decisions aligned with their investment goals. By closely observing the rise and fall of index titans, investors can gain valuable insights into market sentiment and identify potential opportunities.

Remember, this analysis is for informational purposes only and should not be considered financial advice. Always conduct your own research and due diligence before making any investment decisions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.

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