If you’ve been tracking Infosys or TCS results every quarter and wondering how the broader tech sector is doing, the Nifty IT Index is the number you should be watching. Ten companies. One index. It tells you whether Indian IT is having a good run or a rough patch, without you having to check 10 different stock prices. This article breaks down what the index is, what’s inside it right now, and what actually makes it move.
The Basics First
The Nifty IT Index is a sectoral index of the National Stock Exchange (NSE) that tracks the performance of leading information technology companies listed on the exchange.
It includes some of India’s largest IT and technology service companies that derive a significant portion of their revenues from software services, consulting, business process management, cloud solutions, and digital technologies. The index currently consists of 10 major companies from the Indian IT sector and is maintained by NSE Indices.
Simply put, if India’s IT sector performs well, the Nifty IT Index generally moves higher. If the sector faces challenges such as lower global demand or slower technology spending, the index may come under pressure.
What’s Inside the Nifty IT Index
Ten stocks make up the entire index. All of them are software, IT services, or IT-enabled businesses listed on the NSE. Here’s the official composition as per NSE Indexogram data dated June 30, 2026:
Infosys leads the index at 30.41%, followed by TCS at 20.48%. Together they account for over 50% of the index weight. HCL Technologies and Tech Mahindra follow at 11.16% and 10.84% respectively both significantly higher than what many investors expect.
| Company | Weightage (%) |
|---|---|
| Infosys Ltd. | 30.41 |
| Tata Consultancy Services Ltd. | 20.48 |
| HCL Technologies Ltd. | 11.16 |
| Tech Mahindra Ltd. | 10.84 |
| Wipro Ltd. | 5.94 |
| Persistent Systems Ltd. | 5.71 |
| Coforge Ltd. | 4.88 |
| LTIMindtree Ltd. | 3.99 |
| MphasiS Ltd. | 3.48 |
| Oracle Financial Services Software Ltd. | 3.12 |
This concentration matters in practice. On a day when Infosys drops 4% after a weak quarterly result, the nifty IT index falls roughly 1.2% from that one stock alone, even if everything else holds flat. Understanding this helps you make sense of sharp intraday index moves without panicking.
NSE applies weightage caps at every rebalancing; no single stock can exceed 33%, and the top three stocks combined cannot cross 62% of the total index weight. These limits prevent one company from dominating so heavily that the index stops being a sector tracker and becomes a single-stock proxy.
Index Returns as of June 30, 2026
This part is worth sitting with for a moment. The official NSE return data from the Indexogram report paints a clear picture of where the index stands:
| Period | Price Return (%) |
|---|---|
| QTD (Quarter to Date) | -9.51 |
| YTD (Year to Date) | -30.58 |
| 1 Year | -32.48 |
| 5 Years (CAGR) | -2.05 |
| Since Inception (CAGR) | 20.03 |
The 1-year return of -32.48% and YTD of -30.58% reflect the significant pressure on Indian IT stocks through 2025-26. US tech spending cuts, a stronger rupee eating into dollar-denominated revenues, and repeated earnings downgrades from majors like TCS and Infosys drove the index down sharply from its highs.
The 5-year CAGR of -2.05% tells you the index has essentially gone nowhere on a 5-year basis. But the since-inception CAGR of 20.03% puts that in context this index has compounded at 20% annually since 1996, making it one of the strongest long-run performers among NSE’s sector indices. Short cycles of underperformance are part of that story.
The nifty IT index also has a standard deviation of 23.57% over 1 year, which signals meaningful volatility. It has a Beta of 0.76 against Nifty 50 over 1 year and 0.95 over 5 years meaning it moves slightly less than the broader market in short windows but tracks it closely over longer periods.
How the Index Value Is Calculated
The nifty information technology index uses the periodic capped free-float methodology. Here’s what that actually means.
Free-float means only publicly tradeable shares are counted. Promoter holdings, government-locked shares, and strategic cross-holdings are excluded. So the index measures what the open market is actually pricing not the full issued share capital.
Periodic capping means the weightage caps described earlier are applied at each rebalancing point, not continuously. Between rebalancing dates, weightages drift with price changes. At the next review, they get reset.
The formula:
Index Value = (Current total free-float market cap of all 10 stocks ÷ Base market capitalisation) × Base Value
As the 10 stocks trade throughout the day, their combined free-float market cap changes every second. The index divides that by the fixed base market cap and multiplies by the base value to give you the live index level.
Corporate actions, bonus issues, stock splits, rights offerings are adjusted for so they don’t create artificial jumps or drops in the index level on the day they happen.
Who Gets Into the Nifty IT Index
Not every IT company listed on the NSE qualifies. The selection criteria from NSE’s official methodology:
- The company must be part of the Nifty 500 at the time of review. If eligible IT stocks within Nifty 500 fall below 10, NSE can pull from the top 800 universe ranked by average daily turnover and market capitalisation over the previous 6 months.
- The company must be classified under the IT sector as per NSE’s industry classification.
- Trading frequency must be at least 90% in the last six months — meaning the stock should have traded on at least 9 out of 10 trading days.
- Minimum listing history of 1 month as on the cutoff date.
- Final selection of 10 companies is based on free-float market capitalisation. Preference is given to companies already available in NSE’s Futures & Options segment.
The rebalancing cut-off dates are January 31 and July 31 each year. NSE uses average data from the six months ending on those dates. Four weeks’ prior notice is given to the market before any constituent change takes effect so there’s no surprise on the change date.
A three-tier governance structure manages the index, the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee. Changes don’t happen arbitrarily; they go through this framework.
Index Fundamentals (June 30, 2026)
| Metric | Value |
|---|---|
| P/E Ratio | 17.26 |
| P/B Ratio | 4.72 |
| Dividend Yield | 3.48% |
A P/E of 17.26 is notably lower than where Indian IT stocks were trading in 2021–22 when many names were at 30–40x earnings. The correction has brought valuations back to more reasonable territory. A dividend yield of 3.48% is relatively high for an equity index, reflecting that the sharp price fall has pushed yields up. These numbers matter when deciding whether the current level represents fair value or whether there’s more downside risk.
What Actually Moves This Index
1. The Dollar-Rupee Exchange Rate
India’s big IT firms, Infosys, TCS, HCL, and Wipro, earn the bulk of their revenue in US dollars from North American and European clients. Every dollar they earn gets converted to rupees when reported in Indian accounts. A weaker rupee means more rupees per dollar, so earnings look better even if business volume hasn’t changed. When the rupee strengthens, the same dollar revenue shrinks in rupee terms. Currency movement is a variable that directly feeds into margins, and the Nifty Technology Index reflects it.
2. US and European Tech Spending
This is the primary driver. Indian IT is a service export industry. When US companies tighten budgets, IT is among the first spending categories cut or deferred. The 2022–23 slowdown showed this clearly: rising US inflation pushed the Fed to hike aggressively, enterprises pulled back on outsourcing and digital transformation spend, and Indian IT companies reported slower deal wins for six consecutive quarters. The it index followed all the way down.
3. RBI and Fed Rate Cycles
Rate decisions on both sides affect the index. RBI rate cuts lower borrowing costs domestically and encourage technology investment. US Fed rate hikes tighten corporate budgets and reduce the appetite for outsourcing new projects. The Fed’s cycle tends to have a more direct impact, given how large North American revenues are for the top four IT companies in the index.
4. FII Flows Into Indian IT
Foreign institutional investors hold large positions in TCS, Infosys, and HCL. When global risk sentiment shifts, recession fears, geopolitical tension, US rate signals. FIIs reduce emerging market holdings, and Indian IT gets sold first because it’s among the most liquid. These outflows create sharp short-term index moves that don’t necessarily reflect underlying business changes.
5. Government Spending on Technology
Domestic revenue from government contracts, defence technology, railway IT systems, and public health digitisation has grown meaningfully for some IT companies. The Union Budget 2024-25 allocated ₹1,16,342 crore toward IT and telecom, signalling continued public sector demand. This doesn’t move the index on a single day, but it shapes the medium-term revenue visibility for companies that have strong government client exposure.
How to Get Exposure to the Nifty IT Index
You can’t buy the index itself. But there are several practical routes.
Buying individual stocks is the most direct. You pick TCS, Infosys, HCL Tech, or any other constituent and hold them in your Demat account. The trade-off is that you’re making active stock calls rather than tracking the sector as a whole, and managing 10 positions individually takes more effort.
IT sector mutual funds give you active management. A fund manager decides which technology stocks to overweight; they may hold names outside the 10-stock index basket too, so performance will diverge from the Nifty IT index. Worth it if you believe active management adds value in this sector.
Index funds replicating the Nifty IT index hold exactly the same 10 stocks in the same proportions. No active calls. Lower expense ratios. If your view is simply “I want clean IT sector exposure,” this is the most efficient route.
IT ETFs work like index funds but trade on the exchange during market hours at live prices rather than end-of-day NAV. Useful for investors who want to enter or exit at specific price points intraday.
Futures and options contracts exist for the Nifty IT Index for those who want to hedge existing IT holdings or take directional leveraged positions. Not a product for long-term retail investors without derivatives experience.
Things to Think About Before Investing
Ten stocks in one sector. That is the entire index. There’s no cushion from other parts of the economy when IT goes through a rough period, and the current data shows what a rough period looks like. YTD returns of -30.58% with no diversification buffer are a real experience that investors in IT sector funds faced through 2025–26.
Infosys at 30.41% and TCS at 20.48% together make up over half the index. A bad earnings quarter from either company moves the index meaningfully. That’s not sector diversification in the traditional sense; it’s concentrated exposure to two businesses.
The P/E of 17.26 is low by historical IT standards, which could mean the sector is attractively valued after the correction. Or it could mean earnings expectations are still being revised downward. Both interpretations are valid, and which one you believe should inform whether this is a time to enter or wait.
Currency exposure is embedded in every IT investment. You’re taking a view on rupee-dollar dynamics, whether you’re thinking about it or not.
How to Invest in IT Sector Funds Through Pocketful
Step 1: Create Your Account
Download the Pocketful app and sign up.
- Enter your mobile number and verify with OTP
- Set your login credentials
- Access your dashboard
Step 2: Complete Your KYC
The entire process is online and paperless.
- Add PAN and Aadhaar details
- Enter bank account information
- Complete digital verification
Step 3: Pick Your IT Fund
Browse IT sector mutual funds, stocks and ETFs on the platform.
- Compare expense ratios and rolling returns vs the Nifty Technology Index benchmark
- Check fund portfolio overlap with the Nifty IT Index
- Choose a direct plan for a lower cost
Step 4: Start Investing and Track
- Start a SIP or lump sum in your chosen IT fund
- Track NAV movement and portfolio performance from the dashboard
- Review against the index benchmark every 6–12 months
Conclusion
The Nifty IT Index has been tracking India’s technology sector since 1996, compounding at 20% annually since inception despite going through multiple severe corrections along the way. The current setup- 10 stocks, Infosys and TCS making up over half the weight, YTD returns deep in negative territory, reflects both the structural strength of Indian IT and the cyclical pressures the sector faces right now. Before investing in any fund benchmarked against the Nifty Information Technology Index, knowing the return data, the concentration, and what drives the index up and down helps you hold through the rough patches rather than exit when it hurts most.
Start investing in IT sector mutual funds through Pocketful, with zero commission on mutual fund investing, so more of your returns stay with you.
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Frequently Asked Questions (FAQs)
How many stocks are in the Nifty IT Index?
Ten. All of them are IT sector companies listed on the NSE. The composition is reviewed in June and December each year.
Can I invest directly in the Nifty IT Index?
No. You invest through index funds, ETFs, sector mutual funds that track or invest in the same stocks, or by buying individual constituents directly.
Is this the same as Nifty 50?
No. Nifty 50 has 50 stocks across 13 sectors. The Nifty IT Index has 10 stocks, all from the IT sector only. They’re entirely different indices.
When does the IT index get rebalanced?
Twice a year, in June and December. Changes take effect from the last Thursday of the review month.
