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Nifty Shake-up: Banks Surge, IT Stocks Falter Amid AI Fears
17 Feb
Summary
- Banks now hold a larger share in the Nifty index than IT stocks.
- IT stocks have significantly declined due to AI disruption fears.
- Foreign investors sold Indian IT shares worth ₹75,000 crore in 2025.
The benchmark Nifty index is experiencing a notable shift in sector influence, with banking stocks consolidating a stronger position while information technology (IT) stocks see their weight diminish. As of February 16, 2026, the free-float weight of IT stocks in the Nifty had fallen to 8.7%, a decrease from 9.94% at the beginning of the year. Concurrently, banks' share in the index has grown to 27.6%, an increase from 26.61%.
This reallocation of weight reflects performance trends, with the Nifty IT index down over 13% so far in 2026, contrasting with a 2.3% rise in the Bank Nifty. Investor sentiment toward Indian IT companies has been impacted by concerns over artificial intelligence (AI) disrupting the sector's traditional business model, a trend that has seen foreign investors offload shares. Last year, overseas investors divested nearly ₹75,000 crore from Indian IT stocks, the highest across all sectors.
The oil & gas sector, bolstered by companies like Reliance Industries, has now become the second most influential component of the Nifty, holding a 9.36% weight. This strategic shift underscores a broader market recalibration, moving away from IT dominance towards sectors demonstrating more robust earnings trajectories and market liquidity.
