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In its last rebalancing of the 2010s, the benchmark index dropped the ailing YES Bank, which has lost 74 per cent of its value this year.
Despite enduring a period in which banks faced some of the worst bad loans among major economies, YES Bank’s fall from favour is an exception among the country’s large private sector banks. The weightings of financial industry stocks on the benchmark S&P BSE Sensex doubled this decade, with investors eyeing growing demand for credit in Asia’s third-largest economy.
Their high weight is also due to regulations that pushed banks to increase their free-float market cap.
“Financials have had a dominant phase in the last few years on the index, partly because other sectors have struggled,” said Dharmesh Kant, head of retail research at Indianivesh Securities.
While financials will probably maintain the top spot on the index for some time in the 2020s, consumer-oriented firms are likely to grow in heft.
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