India's Nifty 50 slipped again Tuesday and is down 8% this year, even after the economy posted a stronger-than-expected 7.8% June-quarter expansion.
About 45% of the index is concentrated in financials and IT, sectors analysts say are lagging as banks curb risk and IT firms face revenue and margin pressure from AI disruption.
That has left faster-growing parts of the economy underrepresented: Nifty IT is down nearly 18% and Nifty Bank more than 4%, while many manufacturing, fintech and consumer-tech names sit outside the benchmark.
Mid- and small-caps are tracking domestic growth more closely, with Nifty Midcap 150 up 10% over the past year and June-quarter earnings growth at 31% versus 11% for Nifty 50 companies.
The gap reflects a broader profit and investment shift—mid-caps' share of listed-company capex rose to 20% from 14% in six years, while large-caps' share fell to 72% from 78%.