Sector-wise Weight-age in NIFTY. Can we expect any change in near term??

[Nitin Bhatia]

Sir
As Entire Financial Sector (BANKS, FINANCE – HOUSING, FINANCE) is under-performing NIFTY 50 by around 12-15% or relationship/correlation between Bank Nifty & NIFTY 50 is broken, can we expect any changes in Sectoral Weightage in NIFTY 50.
Currently Financial’s have 36.19 % weightage while Pharma has only 3.11%. I know there these are related to Market Capitalization of Companies but other that few companies going out & few getting in, can we see any new sectoral shift or its too early to give up on financials.

[Nitin Bhatia]

By default, the weightage is linked to the performance of the stocks in the sector. Historically, the weightage of financial sector stocks were around 30% but due to over valuation, it increased to around 36%. Secondly, the weightage will change if there is any addition or deletion of stock from Nifty like Yes bank moved out.

In my opinion, Fair value of financial sector in Nifty 50 should be around 30%. I don’t foresee any sectoral shift besides these 2 factors.

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