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About NIFTY IT


The NIFTY IT index is a stock market index in India that represents the performance of the Information Technology (IT) sector. It is part of the broader Nifty indices, which are managed and owned by the National Stock Exchange of India (NSE). The NIFTY IT index includes companies engaged in software development, IT services and other activities within the IT sector.

The NIFTY IT index is designed to track the performance of IT companies listed on the NSE and provides investors with a benchmark to assess the overall health and trends of the IT industry. It is a useful tool for investors and market analysts interested in the sector trends.


What is the NIFTY IT Index?


The NIFTY IT index is one of the most important indices as it includes some of the most prominent large-cap companies in the stock market such as Infosys, TCS and Wipro. This real-time index consists of 10 tradable, exchange-listed IT stocks actively involved in information technology.

NIFTY IT Index was founded in 1996 and it is owned and managed by NSE Indices Limited, formerly known as India Index Services and Products Limited. The index operates under a three-tier structure. This structure includes the Board of Directors of NSE Indices, the Index Advisory Committee and the Index Maintenance Sub-Committee.

Companies included in the NIFTY IT index are engaged in various IT services, including computer software and consulting, computer hardware and equipment, education, IT-enabled services and software products.

There is a variant of the NIFTY IT index called the NIFTY IT Total Returns Index. This index is used for launching index funds, ETFs, structured investment products and benchmarking fund portfolios.


History


The index was introduced with January 1, 1996, as the base date and an initial base value of 1,000. This base value was later adjusted to 100, starting from May 28, 2004, and a cap of 33% was implemented. The index undergoes rescheduling on a bi-annual basis. The rebalancing cut-off date is January 31 and July 31 of each year.

Constituent Companies


The NIFTY IT index comprises leading companies in the Indian Information Technology sector. These companies are Infosys, Tata Consultancy Services, Tech Mahindra, HCL Technologies, Wipro, MphasiS, MindTree, Larsen and Toubro Infotech, Coforge and L&T Technology Services. Collectively, Infosys and TCS contribute to over 50% of the index's total weight.

Criteria for Companies Constituent to Be Included in NIFTY IT:

  • The company must be part of the NIFTY 500 during the review.
  • It must belong to the IT sector.
  • The company's trading frequency should be at least 90% in the last six months.
  • The company should have a minimum listing history of 1 month as of the cutoff date.
  • The final selection of 10 companies is based on free-float market capitalisation. Preference will be given to companies available for trading in NSE’s Futures and Options segment during the final selection.
  • Each stock's weightage in the index is calculated based on its free-float market capitalisation.
  • No single company's stock can exceed 33% and the cumulative weightage of the top 3 stocks cannot surpass 62% during rebalancing.


How are NIFTY IT Companies Ranked?


The constituent companies are arranged in descending order according to their average free-float market capitalisation. The final selection of 10 companies is based on the free-float market capitalisation with the criteria that a company's market capitalisation is at least 1.5 times that of the smallest constituent in the index.
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