Bank stocks regain some of lost clout in Nifty50 | Economic Times

Mumbai: Bank shares pushed the benchmark indices to all-time closing highs on Monday but their contribution to this record-breaking rally since late-March is probably the lowest in the past decade. The banking and finance sector, which has the highest weightage of 36.41% on the main indices, has recouped a portion of its influence on the benchmarks but it is still below the all-time highs. Investors are pinning hopes on shares of these lenders to push the market higher.The sector has regained 5.3% weightage in the Nifty index in the last four months thanks to the rally in bank shares after it fell to 31.13% in June from 42% in January — when the market hit the previous all-time highs. After the selloff started on February 19, bank shares were most hit on worries that economic disruptions due to the lockdown would result in a spike in bad debts.The Nifty Bank index has gained over 15% in the last one month. The rise in weightage could lead to these shares attracting majority of the foreign portfolio inflows.“With the FPIs’ banking assets under custody at $129 billion, the sector remains the highest weighted with an allocation of 31.4% versus 29.1% in Sep-20,” said Abhilash Pagaria, analyst, Edelweiss Securities.79137210While bank shares underperformed, technology shares were the top performers, resulting in the sector’s weight on the Nifty surging to 17.58% in November — the highest in over 12 years. In December 2019, its weightage on the Nifty was 12.80% and rose to 14.09% in June. FPIs bought IT stocks worth $593 million in October; they have cumulatively bought IT stocks worth $1 billion over the last four months. FPI exposure to the IT sector is at a multi-month high of 14.6%. The Nifty IT index gained 21% in the last three months powered by strong September quarter results, buyback announcements and upbeat commentary by all management teams in the sector.