The free-float weight of IT stocks in the Nifty benchmark has dropped to 8.7% as of February 16, down from 9.94% at the start of 2026, according to ETIG data. Meanwhile, banks' weight has increased to 27.6% from 26.61% in the same period. This decline in IT sector influence has allowed the oil & gas segment, spearheaded by Reliance Industries, to become the second most powerful sector with a 9.36% share. In indexes like Nifty, stock weights show which sectors lead the market based on earnings and liquidity. Sunny Agrawal, head of Fundamental Research at SBI Securities, said, "There has been a clear shift in the relative weights among the two heavyweight sectors, since the weight on the benchmark is assigned based on free float market cap." He noted IT's reduced weight is due to its underperformance compared to faster growing sectors. This year, the Nifty IT index has fallen over 13%, while Bank Nifty gained 2.3%. The Nifty overall is down 1.7%. The IT sector's fall worsened after a recent sell-off triggered by fears of AI disruption, which dented investor confidence in software stocks. The IT weight has been shrinking for longer, from 13.05% at the beginning of 2025. Dharmesh Kant from Cholamandalam Securities said, "The shift in weight for banking and IT stocks on Nifty 50 has moved in tandem with the change in earnings trajectory for both sectors." He added, "The fear of AI disruption is a recent threat, but Indian IT stocks have been stagnating before this due to limited or reduced spending on software services." Over the past year, the Nifty IT index has dropped more than 20%, while Bank Nifty rose about 24%. Overseas investors sold nearly ₹75,000 crore worth of IT shares in 2025, marking the highest sectoral selling, compared to ₹14,900 crore in financial stocks. Sriram Velayudhan of IIFL Capital said, "Active foreign funds have consistently cut exposure to the Indian IT sector over the past one year." Though selling intensity has eased, caution remains as investors watch AI disruption impacts carefully.