What is NIFTY IT?

Information Technology sector is one of the significant contributors to the economic growth
of India. NIFTY IT sector index has been developed to provide investors and other market
agents with a benchmark that signifies the performance of IT sector of the market in India.
The index has TOP 10 best performing companies in the IT sector. According to recent data
at NSE, they are namely:

 INFY (Infosys)
 TCS (Tata Consultancy Services)
 HCLTECH (HCL Technologies)
 TECHM (Tech Mahindra)
 WIPRO (Wipro)
 LTIM (Larsen & Toubro Infotech)
 COFORGE (Coforge)
 MPHASIS (Mphasis)
 LTTS (L&T Technology Services)

SECTORAL DISTRIBUTION OF NIFTY IT

The sectoral distribution of NIFTY IT companies is shown in the picture below.

(Source: https://www.niftyindices.com/indices/equity/sectoral-indices/nifty-it)
CURRENT MOVERS AND DRAGGERS IN THE SECTOR
Companies namely HCLTECH, COFORGE, MPHASIS are being considered as the TOP MOVER
in the market. Subsequently, companies like Persistent, INFY and TCS are TOP DRAGGERS.

(Source: https://www.niftyindices.com/market-data/index-movers)

NIFTY IT INDEX OVER THE YEARS

Let us consider the time period of 10 years such that from 2013-2023 (current) for the
performance analysis of NIFTY IT. According to the data provided by Bloomberg on historical
returns, NIFTY IT index has produced an average return of 279.35% over the past 10 years.
Moreover, as per the Money Control data, NIFTY IT has given an average return of 96% over
the past 5 years.

The index reached a record high of 38,839.49 on January 10, 2022, but fell to a low of
11,653.74 on March 30, 2022, due to a combination of factors, including rising interest rates,
a slowdown in global economic growth due to COVID-19, the ongoing war in Ukraine and
appreciation of the Indian rupee, selling of equities by foreign institutional investors (FIIs),
etc.

Although NIFTY IT has recently experienced the aforementioned drawbacks, it is still up over
40% from its January 2013 level. This suggests that the Indian IT sector is well-positioned for
long-term growth.

(Source: https://www.bqprime.com/markets/equities/historical-returns,
https://www.moneycontrol.com/indian-indices/nifty-it-19.html)
The following graphs represent the overall behaviour of NIFTY IT over the years:

(a.) Highlighting the NIFTY IT index price in 2013

 (b.) Highlighting the NIFTY IT index price at its low in 2020

(c.) Highlighting the NIFTY IT index at its peak in 2022

(d.) Highlighting the NIFTY IT index at present

(Sources: https://www.moneycontrol.com/indian-indices/nifty-it-19.html)
How is the Indian IT sector affected?
Although the IT sector has been facing difficulties in the recent times as evident from the
recent lows in NIFTY IT index, yet the sector is apparently bound to grow significantly in long
term aspects. The reason for the same is rising demand for innovative IT and software
solutions, the adaptation of new digital technologies by businesses across the world, , etc.

Outlook for the Nifty IT index

The outlook for the Nifty IT index is obscure in the short-term basis. The index may continue
to face downward fall. However, in the long term, the index is expected to recover and
continue its growth trajectory.

Investment advice
Any person who is opting to invest in the IT sector should do so in a meticulous manner. One
should invest in the stocks of companies that hold sound fundamentals in their business and
have good track record of profitability in long term.