21 September 2017
India Strategy
BSE Sensex: 32,401
S&P CNX: 10,141
Sectoral weights in Nifty: A journey down the memory lane
Financials lord over the indices; set to gain further strength
Over the years, the sectoral representation in Nifty-50 has undergone a sea change, in
consonance with the changes in the underlying economy – new sectors have evolved,
while some of the erstwhile dominant sectors of the economy have lost relative
importance in the new India.
In this report, we take a deep dive to understand how the weights of various
sectors/companies in Nifty-50 have changed in the last 15 years.
Index moving to free float basis
have boosted weight of Pvt.
Financials
Banks-PVT
Free float weight
from 2009
BFSI and Oil account for almost half of the index
NBFC
Free float weight
from 2009
Banks-PSU
Free float weight
from 2009
The weight of Financials has seen a secular rise in the benchmark indices. BFSI
now contributes 35.6% (+3.1x in 15 years) of Nifty-50. The share of Private
Banks/NBFC in the index has gone up, led by
a) better earnings performance,
coupled with capital raising from the markets (this boosted the free float of
Financials), b) sub-par earnings growth witnessed in other sections of the
market over the last eight years and c) index moving to a free float basis from
June 2009.
As more Insurance companies are listed and the relevance of NBFCs goes up
(given the wider financialization of savings and broad-basing of financial
disintermediation), we expect the weight of BFSI to inch up further.
We note that 15 years back, PSU Banks’ weight (4.7%) was higher than Private
Banks (4.4%) in the index, with SBI alone contributing 4.4% of Nifty-50. Today,
at 24.3%, Private Banks have the highest weight in Nifty-50, while PSU Banks
have just 3% weight. HDFC Bank, at 9.8%, is the highest weighted stock today,
much higher than 1.8% 15 years back.
Six out of the nine BFSI companies in Nifty-50 today are private banks. In India,
there are 22 listed PSU banks and only 17 listed private banks. This is
significantly different from how things were 15 years back in Nifty-50 – five BFSI
companies, of which only two were private banks. Notably, of the 19 listed
private banks in December 2002, eight have merged till-date.
Weight of Oil & Gas in the index has fluctuated significantly over the last 15
years, in line with the underlying volatile earnings stream of the sector. The
sector weight was at 17.6% around 15 years back. However, with the inclusion
of ONGC, it gradually climbed to the 1
st
position a decade ago to 25.4%. The
sector’s weight has been stable at ~11-12% over the last five years with
moderation in earnings growth.
Out of the 50 stocks in Nifty, 22 have been part of the index since 15 years. Of
these 22, three each are from Technology and Auto (they have been in the
index for 15 years now). Private Banks, Consumer, Oil & Gas, Metals,
Healthcare and Cement have two stocks each, while NBFC, Capital Goods, PSU
Banks and Utilities have one stock in the index.
Combined weight of these 22 stocks declined to 62.7% v/s 75.3% 15 years back,
but is up from 44.3% as of December 2007.
44% of Nifty-50 constituents unchanged over 15 years
Gautam Duggad – Research Analyst
(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
Deven
2017
– Research Analyst
(Deven@MotilalOswal.com); +91 22 3982 5440
June
Mistry
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
1

India Strategy | Nifty-50 Weight
Staying in Top-10 is not easy – only Reliance could manage that
Over the last 15 years, Reliance Industries (RIL) is the only stock to maintain its
position in the Top-10 in Nifty-50. However, the stock’s weight in the index has
declined by 41%, from 12.3% in December 2002 to 7.3% in September 2017.
Notably, over the last five years, eight stocks have consistently featured in the
top 10 list.
HDFC Bank and LT have exhibited the strongest improvement in their rankings,
moving up from 14
th
and 19
th
position then to 1
st
and 7
th
positions now,
respectively.
HUL, which was at number two position then, has slipped to 12
th
rank. Wipro,
which was at 3
rd
position, has slipped to 34
th
. This in a way also underscores the
underlying changes in the economy and evolution of new sectors over the past
decade and a half.
Out of the 17 new entrants in Nifty in the last five years, IndusInd Bank/Yes
Bank are at new highs, with their weights increasing 2.6x/2.1x since they
entered the index.
Meanwhile, Bank of Baroda and Tech Mahindra’s weights have halved.
Lupin’s weight is down significantly from its peak of 1.6% to 0.6% now due to
the underperformance of the Pharma sector over the past two years.
Stocks that have seen stable weights after entering the index are: Asian Paints,
Ultratech, Zee Entertainment, Bosch, Adani Ports, Eicher Motors, Aurobindo
Pharma, and Bharti Infratel.
We expect the BFSI sector to strengthen its already strong leadership
positioning in the index. Within BFSI, we expect Private Banks’ weightage to
move up further as the underlying theme of Value Migration from Public Sector
Banks to Private Sector Banks plays out.
As mentioned in the beginning, the listing of key Insurance companies (life as
well as non-life) should further add to BFSI’s weights.
Evolution of Small Finance Banks, Payment Banks and New-age NBFCs will also
lend support to the weightage of BFSI in the index.
Dec-12 weight (%)
Banks-PVT
Consumer
Oil & Gas
Tech
Auto
NBFC
Cap. Goods
Healthcare
Banks-PSU
Utilities
Cement
Metals
Telecom
Real Estate
16.9
12.3
12.3
11.4
8.8
7.9
5.9
5.0
4.7
4.5
4.2
3.8
2.0
0.5
Sep-17 weight (%)
Banks-PVT
Oil & Gas
Tech
Auto
Consumer
NBFC
Healthcare
Cap. Goods
Utilities
Metals
Banks-PSU
Cement
Telecom
Misc
Media
24.3
11.3
11.2
10.8
9.7
8.4
4.1
4.0
3.9
3.7
3.0
2.1
2.1
0.8
0.8
Source: NSE, MOSL
2
Weight of new entrants over past five years has been quite stable
Some of listed new age Financials
Crystal Ball Gazing: Financials set to extend its dominance
Exhibit 1:
Sharp reversal in fortunes of BFSI over the last 15 years
Dec-02 weight (%)
Tech
Consumer
Oil & Gas
Healthcare
Auto
Banks-PSU
Banks-PVT
Cap. Goods
Metals
Telecom
NBFC
Cement
Utilities
Media
Misc
8.3
5.6
4.7
4.4
3.1
2.9
2.6
2.6
2.4
1.6
1.2
1.1
th
24.2
17.9
17.6
Dec-07 weight (%)
Oil & Gas
25.4
Telecom
Cap. Goods
Tech
Metals
Utilities
Banks-PVT
Banks-PSU
Consumer
Auto
NBFC
Real Estate
Healthcare
Cement
Media
11.4
10.5
9.5
9.0
8.2
5.6
4.1
3.6
3.4
2.3
2.3
2.2
2.1
0.4
Note: Prices and weight as of 18 Sep 2017
21 September 2017

India Strategy | Nifty-50 Weight
Index moving to free float basis
have boosted weight of Pvt.
Financials
Banks-PVT
Free float weight
from 2009
Interesting observations from sectoral weight changes in past 15 years:
Private Financials at all-time high; PSU Banks at new lows
NBFC
Free float weight
from 2009
Banks-PSU
Free float weight
from 2009
Financials’ weights have kept rising over the years.
BFSI now contributes 35.6%
of Nifty-50 (+3.1x in 15 years). 15 years back, PSU Banks’ weight (4.7%) was
higher than Private Banks (4.4%) in the index.
Today, at 24.3%, Private Banks have the highest weight in Nifty-50, while PSU
Banks have just 3% weight. This underlines the extent of value migration from
public to private sector banks over the past decade.
Automobile, with 10.8% weight in the Nifty, now stands shoulder-to-shoulder
with Oil & Gas and Technology, with ~11% weight. However, the fortunes of
Technology sector have suffered significantly when compared with its peak
weight of Dec-02 (24.2%).
Auto has gained at the expense of Technology:
Auto has bridged the gap versus
Technology, especially over the last two years. The gap between Auto and
Technology has come off from 640bp in CY15 to just 40bp now.
Oil & Gas’ weight in the index has been quite volatile in the last 15 years.
The
sector’s weight was at 17.6% 15 years back; it gradually climbed to the 1
st
position in terms of weight a decade back to 25.4% with the inclusion of ONGC.
The sector’s weight is stable at ~11-12% over the last five years
Consumer’ weight up significantly over the last decade; not as dominant as it
used to be 15 years back, though.
Consumer sector’s weight is up 610bp over
the last 10 years, given its sharp outperformance v/s the index. The rise in
weight of Consumer also underscores the market’s overarching preference for
high-quality defensive names in the immediate aftermath of Global Financial
Crisis. Nonetheless, we note that these weights are nowhere near to 17.6% it
used to enjoy way back in Dec’02, clearly underscoring the evolution of new-age
sectors like Private Banks, Auto, NBFC, etc.
Healthcare’s weights have come off
due to the underperformance over the last
couple of years. The sector has faced multiple headwinds of late – USFDA
regulatory overhang, price erosion and buyer consolidation in the US markets,
and numerous domestic regulatory changes.
Capital Goods’ weight is at a 14-year low
of 4% v/s 10.5% in Dec’07. The sector
now has representation from only LT in the benchmark. This is a clear reflection
of the pain that domestic private capex cycle has gone through in the last six
years.
Metals’ weight has bounced off its lows
of sub-1% in CY15, but it is far off from
the peak of 9.7% in CY03, underscoring the cyclical and volatile nature of the
sector.
Real Estate
has no representation in the Nifty-50.
21 September 2017
3

India Strategy | Nifty-50 Weight
Exhibit 2: Trend in Nifty-50 sectoral weights (%) – Private Financials at all-time high; PSU Banks at new low
Sector
CY02 CY03 CY04 CY05 CY06 CY07
Automobiles
5.6
6.2
6.7
6.8
6.4
3.4
Banks – PVT
4.4
4.6
4.7
5.4
5.7
5.6
Banks – PSU
4.7
5.3
5.8
5.1
4.4
4.1
NBFC
2.6
2.5
2.1
2.2
2.1
2.3
Capital Goods
3.1
4.5
4.0
5.0
8.6
10.5
Cement
2.4
2.9
2.8
2.5
3.3
2.1
Consumer
17.9 12.4
7.8
8.0
6.2
3.6
Healthcare
8.3
7.8
6.3
4.2
3.9
2.2
Media
1.2
1.0
0.8
0.5
0.6
0.4
Metals
2.9
9.7
8.2
5.5
5.0
9.0
Oil & Gas
17.6 21.8 27.1 25.5 21.1 25.4
Real Estate
0.0
0.0
0.0
0.0
0.0
2.3
Technology
24.2 15.4 14.5 20.0 19.4
9.5
Telecom
2.6
2.1
6.3
6.3
12.0 11.4
Utilities
1.6
2.1
1.9
1.5
1.1
8.2
Misc.
1.1
1.6
1.2
1.4
0.3
Nifty-50
100
100
100
100
100
100
Note: Index weight from 2009 is on free-float market cap
Weight in Nifty-50 (%)
CY08 CY09 CY10 CY11
2.5
5.2
7.5
8.1
5.0
11.9 14.5 13.7
5.4
4.7
4.9
3.7
2.3
6.1
6.6
6.9
7.7
10.7
8.7
5.5
1.7
3.4
1.9
3.1
6.5
6.1
6.8
10.7
2.6
2.4
3.7
4.4
0.3
0.0
0.0
0.0
4.8
8.8
8.4
5.6
24.5 17.9 14.7 13.3
3.0
1.6
0.6
0.5
9.0
12.6 14.3 15.8
11.6
4.1
2.9
3.3
13.3
4.7
4.5
5.4
100
100
100
100
CY12
8.8
16.9
4.7
7.9
5.9
4.2
12.3
5.0
0.0
3.8
12.3
0.5
11.4
2.0
4.5
100
CY13
8.9
16.2
3.2
6.7
4.9
3.2
11.6
6.0
0.0
4.4
11.7
0.4
16.9
1.9
4.0
100
CY14
9.3
19.9
4.8
7.1
5.2
2.8
10.5
6.1
0.7
3.1
9.3
0.2
15.7
1.7
3.6
100
CY15
9.9
20.7
3.3
7.0
4.2
2.8
10.1
7.3
0.8
1.3
9.1
0.0
16.3
2.2
4.1
0.8
100
CY16 Sep-17
11.8
10.8
21.5
24.3
3.1
3.0
6.6
8.4
4.0
4.0
3.0
2.1
10.1
9.7
6.3
4.1
0.8
0.8
1.5
3.7
9.4
11.3
0.0
0.0
14.4
11.2
2.3
2.1
4.4
3.9
0.8
0.8
100
100
Exhibit 3:
Sectors that saw increase/decrease in weights over a 5/10/15 year time-period
Weight increase over 5 Yrs
Weight increase over 10 Yrs Weight increase over 15 Yrs
Banks - Private
Automobiles
Media
NBFC
Telecom
Banks - Private
Automobiles
Consumer
NBFC
Health Care
Technology
Media
Oil & Gas
Telecom
Capital Goods
Metals
Utilities
Banks - Public
Cement
Real Estate
Banks - Private
NBFC
Automobiles
Utilities
Capital Goods
Metals
Weight decrease over 5 Yrs
Consumer
Cement
Capital Goods
Banks - Public
Oil & Gas
Health Care
Utilities
Technology
Metals
Weight decrease over 10 Yrs Weight decrease over 15 Yrs
Technology
Consumer
Oil & Gas
Health Care
Banks - Public
Telecom
Media
Cement
Exhibit 4:
Private v/s PSU weights in Nifty-50 (%)
Private
PSU
Index moved to free float from 2009
13.0 23.0
14.3 13.7 13.3 12.7 11.4 12.6 10.4 10.9
32.0 27.2 21.9 27.2 31.4
PSU’s weight in Nifty
nearing single-digits
87.0 77.0
85.7 86.3 86.6 87.4 88.6 87.4 89.6 89.1
68.0 72.8 78.1 72.8 68.6
10.4
89.6
21 September 2017
4

India Strategy | Nifty-50 Weight
Exhibit 5: Number of Private Banks in the Nifty have been on the rise
Sector
Automobiles
Banks - PVT
Banks - PSU
NBFC
Capital Goods
Cement
Consumer
Health Care
Media
Metals
Oil & Gas
Real Estate
Technology
Telecom
Utilities
Misc
Nifty-50
CY02
5
2
2
1
3
3
8
6
1
2
4
6
2
2
3
50
CY03
4
2
2
1
3
3
7
5
1
4
5
6
2
2
3
50
CY04
5
2
3
1
3
3
5
5
1
4
6
4
3
2
3
50
CY05
5
2
3
1
3
3
4
5
1
4
6
5
3
2
3
50
CY06
5
2
3
1
5
3
3
5
1
4
6
5
4
2
1
50
CY07
5
2
2
1
5
3
2
5
1
5
6
1
5
4
3
50
No of Companies in Nifty-50
CY08 CY09 CY10 CY11 CY12
4
4
5
5
5
2
3
4
4
4
2
2
2
2
3
1
3
3
2
2
5
5
4
3
3
3
4
3
4
5
2
2
2
2
3
3
1
5
6
2
5
4
5
50
3
5
5
2
4
3
5
50
4
6
5
1
4
2
5
50
4
6
5
1
4
2
6
50
5
4
5
1
4
1
5
50
CY13
5
5
3
2
2
5
3
5
5
5
1
4
1
4
50
CY14
5
5
3
2
2
4
3
4
1
5
5
1
5
1
4
50
CY15
6
6
3
1
2
4
3
4
1
3
5
5
2
4
1
50
CY16
8
6
2
1
2
4
3
5
1
2
4
5
3
4
1
51
Sep-17
8
6
2
2
1
3
3
5
1
3
5
5
2
4
1
51
44% of Nifty-50 constituents unchanged over 15 years
Out of the 50 stocks in Nifty, 22 have been part of the index since 15 years. Of
these 22, three each are from Technology and Auto; two each from Private
Banks, Consumer, Oil & Gas, Metals, Healthcare and Cement; and one each from
NBFC, Capital Goods, PSU Banks and Utilities.
The combined weight of these 22 stocks declined to 62.7% v/s 75.3% 15 years
back, but up from 44.3% in Dec 2007.
In Private Financials, all three stocks – HDFC Bank (+8%), HDFC (+4.7%) and ICICI
Bank (+2.3%) – have seen an increase in weights over the last 15 years.
Among these 22 stocks, Technology has been the biggest loser in terms of
weight: Wipro (-10.1% decline), Infosys (-4.1% decline), and HCL Tech (relatively
unchanged; -0.2% decline).
In Consumer, HUL’s weight has come off by a massive 900bp, while ITC’s weight
increased from 4.7% to 5.9%.
Exhibit 6: Weights of the 22 common stocks of Nifty-50 since CY02 – Technology biggest loser
Sector
Automobiles
Banks-PVT
Banks-PSU
NBFC
Cap. Goods
Cement
Consumer
Healthcare
Metals
Oil & Gas
Technology
Utilities
Total of above
No of
stocks
3
2
1
1
1
2
2
2
2
2
3
1
22
Weight in Nifty-50 (%)
CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 Sep-17
3.4
4.4
3.9
4.0
3.7
1.8
1.7
3.9
5.3
5.7
6.2
6.6
6.5
5.9
6.2
4.9
4.4
4.6
4.7
5.4
5.7
5.6
5.0 10.3 11.8 11.1 13.6 12.1 13.7 12.9 13.0
14.7
4.4
4.6
3.8
3.5
3.3
3.5
4.5
3.9
4.0
3.0
3.3
2.2
3.4
2.4
2.6
2.6
2.6
2.5
2.1
2.2
2.1
2.3
2.3
4.5
5.2
6.2
6.8
6.0
6.4
7.0
6.6
7.3
1.5
2.1
1.4
1.8
2.1
3.5
2.5
6.7
5.8
3.8
4.6
4.2
4.4
3.7
3.7
4.0
1.5
1.4
1.5
1.5
2.0
1.2
1.1
1.1
1.2
1.6
1.5
1.2
1.1
1.0
0.9
0.9
16.0 10.8 6.9
7.2
5.8
3.6
6.5
6.1
6.8 10.7 11.2 10.5 9.3
8.7
8.8
8.3
2.4
2.2
2.2
1.9
1.9
1.2
2.0
1.9
2.0
2.5
2.6
3.0
3.4
4.3
3.2
2.2
2.9
4.3
3.8
2.8
2.4
2.7
1.4
3.8
4.0
2.7
2.4
2.1
1.7
1.0
1.5
2.1
14.2 15.0 9.9 10.2 9.6 12.4 11.3 13.2 10.3 8.8
7.9
7.6
5.8
6.7
7.0
8.3
21.4 13.4 13.0 12.2 11.8 5.7
5.8 10.1 11.0 11.6 7.9 11.5 9.6 10.7 9.3
7.0
0.7
1.0
0.9
0.6
0.6
0.9
0.9
1.5
1.2
1.0
1.0
0.7
0.5
0.4
0.5
0.4
75.3
66.2
54.2
53.4
50.9
44.3
44.9
66.9
68.6
68.5
69.0
67.8
65.8
64.8
63.2
62.7
21 September 2017
5

India Strategy | Nifty-50 Weight
Exhibit 7: The three common private financials in the index since CY02 saw consistent increase in weights; accounted for
~63% of BFSI weight increase since CY02
Total
6.9
7.1
6.8
7.7
7.8
7.9
HDFC
7.4
14.8
16.9
17.2
20.4
18.1
20.0
19.9
19.6
22.0
HDFC Bank
ICICI Bank
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
Exhibit 8: Technology was biggest loser, with Wipro and Infosys seeing a sharp decline
Total
21.4 13.4
13.0
Wipro
12.2 11.8
Infosys
5.7
5.8
10.1
11.0
11.6
7.9
11.5
9.6
10.7
9.3
7.0
HCL Technologies
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
Exhibit 9: In Consumer, HUL’s weight declined by whopping 900bp, whereas ITC’s weight increased from 4.7% to 5.9%
Total
16.0
10.8
ITC
6.9
7.2
5.8
3.6
6.5
6.1
6.8
10.7
11.2
10.5
9.3
8.7
8.8
8.3
Hind. Unilever
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
Exhibit 10: Reliance Industries’ weight declined from 12.3% to 7.3%
Total
14.2
15.0
9.9
10.2
9.6
12.4
11.3
13.2
10.3
8.8
7.9
7.6
5.8
BPCL
6.7
7.0
8.3
Reliance Inds.
Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Sep-17
21 September 2017
6

India Strategy | Nifty-50 Weight
Reliance Industries – The only stock to maintain its position in top-10
Over the last 15 years, RIL has been the only stock to maintain its position in
top-10 in the index. However, the stock’s weight in the index has declined by
41%, from 12.3% in December 2002 to 7.3% in September 2017.
Notably, over the last five years, eight stocks have consistently featured in the
top-10 list.
HDFC Bank and LT have exhibited the strongest improvement in their rankings,
moving up from 14th and 19th position then to 1st and 7th positions now,
respectively.
HUL, which was at number two position then, has slipped to 12th rank. Wipro,
which was at 3rd position, has slipped to 34th. This in a way also underscores
the underlying changes in the economy and evolution of new sectors over the
past decade and a half.
Dec-07
weight
11.9
7.5
5.9
5.4
4.4
3.9
3.6
3.5
3.5
3.3
Dec-12
weight
ITC
8.4
Reliance Inds.
7.4
ICICI Bank
7.0
HDFC
6.8
HDFC Bank
6.6
Infosys
6.0
Larsen & Toubro
4.6
TCS
3.4
St Bk of India
3.3
Tata Motors
3.0
Company
Dec-15
weight
Infosys
7.8
HDFC Bank
7.5
HDFC
7.0
ITC
6.5
Reliance Inds.
5.9
ICICI Bank
5.4
TCS
4.4
Larsen & Toubro 3.7
Sun Pharma.Ind.
3.2
Tata Motors
2.7
Company
Sep-17
weight
HDFC Bank
9.8
HDFC
7.3
Reliance Inds.
7.3
ITC
5.9
ICICI Bank
4.9
Infosys
4.7
Larsen & Toubro 4.0
TCS
3.5
Kotak Mah. Bank 3.2
Maruti Suzuki
2.8
Company
Exhibit 11: Top 10 stocks over different timeframes (%)
Company
Reliance Inds.
Hind. Unilever
Wipro
Infosys
ITC
St Bk of India
Ranbaxy Labs.
HPCL
Satyam Com.
HDFC
Dec-02
weight
12.3
11.3
11.0
8.8
4.7
4.4
3.2
2.9
2.6
2.6
Company
Reliance Inds.
ONGC
NTPC
Bharti Airtel
Rel. Comm.
ICICI Bank
BHEL
St Bk of India
Larsen & Toubro
SAIL
Exhibit 12: Rank change for common stocks in Nifty-50 over the last 15 years
Company
Bajaj Auto
Hero Motocorp
M&M
Tata Motors
HDFC Bank
ICICI Bank
St Bk of India
HDFC
Larsen & Toubro
ACC
Ambuja Cem.
Hind. Unilever
ITC
Cipla
Dr Reddy's Labs
Sun Pharma.Inds.
Hindalco Inds.
Tata Steel
BPCL
Reliance Inds.
HCL Tech
Infosys
Wipro
Tata Power Co.
Sector
Automobiles
Automobiles
Automobiles
Automobiles
Banks – PVT
Banks – PVT
Banks – PSU
NBFC
Capital Goods
Cement
Cement
Consumer
Consumer
Health Care
Health Care
Health Care
Metals
Metals
Oil & Gas
Oil & Gas
Technology
Technology
Technology
Utilities
Weight in Nifty-50 (%)
Dec-02 Dec-07 Dec-12 Sep-17
1.5
0.8
1.5
1.1
1.5
0.4
1.0
1.3
0.4
0.6
2.3
1.6
1.5
0.8
3.0
2.0
1.8
1.7
6.6
9.8
2.5
3.9
7.0
4.9
4.4
3.5
3.3
2.6
2.6
2.3
6.8
7.3
1.5
3.5
4.6
4.0
0.8
0.6
0.7
0.4
0.7
0.6
0.8
0.5
11.3
1.3
2.9
2.4
4.7
2.2
8.4
5.9
1.6
0.5
1.1
0.8
2.0
0.4
1.2
0.7
0.8
0.7
1.5
1.5
1.3
0.8
0.9
0.9
1.6
1.9
1.5
1.2
1.9
0.5
0.5
1.0
12.3
11.9
7.4
7.3
1.6
0.6
0.9
1.3
8.8
2.9
6.0
4.7
11.0
2.2
1.1
1.0
0.7
0.9
1.0
0.4
Rank in Nifty 50
Dec-02 Dec-07 Dec-12 Sep-17
21
35
16
30
22
48
31
22
40
41
13
18
20
34
10
15
14
20
5
1
11
6
3
5
6
8
9
11
10
14
4
2
19
9
7
7
29
43
42
48
32
38
39
46
2
23
11
12
5
16
1
4
17
45
23
39
12
49
20
42
28
37
18
19
23
36
35
35
16
19
17
27
13
44
45
33
1
1
2
3
18
39
36
24
4
12
6
6
3
17
24
34
33
28
33
49
Rank Change
5 Year 10 Year 15 Year
-14
5
-9
9
26
0
-5
23
22
-5
19
5
4
19
13
-2
1
6
-2
-3
-5
2
12
8
0
2
12
-6
-5
-19
-7
-8
-14
-1
11
-10
-3
12
1
-16
6
-22
-22
7
-30
-1
18
9
0
1
-12
-10
-8
-11
12
11
-20
-1
-2
-2
12
15
-6
0
6
-2
-10
-17
-31
-16
-21
-16
21 September 2017
7

India Strategy | Nifty-50 Weight
Weight of new entrants over past five years is quite stable
Out of the 17 new entrants in Nifty in the last five years, IndusInd Bank/Yes Bank
are at new highs, with their weights increasing 2.6x/2.1x since they entered the
index.
Meanwhile, Bank of Baroda and Tech Mahindra’s weights have halved.
Lupin’s weight is down significantly from its peak of 1.6% to 0.6% now due to
the underperformance of the Pharma sector over the past two years.
Stocks that have seen stable weights after entering the index are: Asian Paints,
Ultratech, Zee Entertainment, Bosch, Adani Ports, Eicher Motors, Aurobindo
Pharma, and Bharti Infratel.
Weight (%)
Dec-14
Dec-15
1.2
0.7
1.2
1.0
1.2
1.4
0.7
1.4
0.5
1.6
1.0
1.7
1.1
0.8
0.8
0.6
0.8
Exhibit 13: Out of the 17 stocks that entered in Nifty in last five years, IndusInd Bank and Yes Bank’s weights are at new highs
Company
Asian Paints
Bank of Baroda
Lupin
UltraTech Cem.
IndusInd Bank
Tech Mahindra
Zee Entertainmen
Yes Bank
Bosch
Adani Ports
Eicher Motors
Aurobindo Pharma
Bharti Infra.
Tata Motors-DVR
IOCL
Indiabulls Hous.
Vedanta
Date of
Inclusion
27-04-2012
27-04-2012
28-09-2012
28-09-2012
01-04-2013
28-03-2014
19-09-2014
27-03-2015
29-05-2015
28-09-2015
01-04-2016
01-04-2016
01-04-2016
01-04-2016
31-03-2017
31-03-2017
26-05-2017
0.4
1.2
0.9
0.4
Drop
Dec-12
1.1
0.8
0.8
1.1
Dec-13
1.1
0.6
1.0
0.9
0.9
Dec-16
1.3
0.5
1.2
1.1
1.8
1.0
0.8
1.3
0.6
0.8
1.0
0.6
0.6
0.5
Sep-17
1.5
0.4
0.6
1.1
2.3
0.7
0.8
1.8
0.5
0.8
1.1
0.6
0.7
0.3
1.1
1.1
1.6
Exhibit 14:
Number of stocks reshuffled each year over the years
7
6
5
3
2
3
3
2
5
4
4
3
3
4
3
3
Number of stocks reshuffled
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
CY17
YTD
Source: NSE, MOSL
21 September 2017
8

India Strategy | Nifty-50 Weight
Some of listed new age Financials
Crystal Ball Gazing: Financials set to extend its dominance
We expect the BFSI sector to strengthen its already strong leadership
positioning in the index. Within BFSI, we expect Private Banks’ weightage to
move up further as the underlying theme of Value Migration from Public Sector
Banks to Private Sector Banks plays out.
As mentioned in the beginning, the listing of key Insurance companies (life as
well as non-life) should further add to BFSI’s weights.
Evolution of Small Finance Banks, Payment Banks and New-age NBFCs will also
lend support to the weightage of BFSI in the index
Exhibit 15:
Financials weights in World stock indices
47.9
35.6
34.0
21.7
14.4
13.0
2.8
Hong Kong
India
Brazil
UK
US
Taiwan
Japan
Note: Sector classified as per GICS
Source: Bloomberg, MOSL
Exhibit 16:
Trend in Financials weights - Financials have gained weights across the board
Country
Hong Kong
India
Brazil
UK
US
Taiwan
Japan
Index
HSI
Nifty
IBOV
UKX
SPX
TWSE
NKY
CY12
47.1
29.5
28.4
19.0
15.6
14.0
4.0
CY13
46.6
26.1
25.7
19.7
16.2
14.9
4.0
Financials weight in benchmark index (%)
CY14
CY15
47.1
46.1
31.7
31.0
32.4
32.0
21.0
21.8
16.6
16.5
14.0
14.3
3.4
3.4
CY16
Sep-17
47.5
47.9
31.2
35.6
34.1
34.0
20.8
21.7
14.8
14.4
13.9
13.0
3.0
2.8
Source: Bloomberg, NSE, MOSL
Exhibit 17:
Sectoral weights of India (Nifty-50) (%)
24.3
11.3
11.2
10.8
9.7
8.4
4.1
4.0
3.9
3.7
3.0
2.1
2.1
0.8
0.8
Source: NSE, MOSL
21 September 2017
9

India Strategy | Nifty-50 Weight
NOTES
21 September 2017
10

THEMATIC/STRATEGY RESEARCH GALLERY

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its
India Strategy |
constitute an
Weight
affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not
Nifty-50
offer, invitation or
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for
future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors
on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and
interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt
generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates
may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment
decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.
MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies
mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an
advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent
conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research
separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from,
any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free
and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other
sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a
subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the
document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that
may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the
implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for
any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation
for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this
report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against Motilal Oswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and
adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to
SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of Motilal Oswal Securities Limited -Click
here to access detailed report
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive
compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee
Companies where there is interest
No
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which
would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has
an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to
SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,
products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in
Hong Kong.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a
registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the
absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This
document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be
engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by
the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal
Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore,
may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the
Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232/ (+65) 68189233 / 65249115
Office Address: 21 (Suite 31),16 Collyer Quay,Singapore 04931
For U.S
21 September 2017
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
Motilal Oswal Securities Ltd
12