The composition of the Nifty 500 index has shifted over the years, with financials, industrials, and consumer discretionary dominating the index at the current juncture, reflecting India’s evolving economic landscape.
The composition and performance of the Nifty 500 over the past 26 years reflect a structural transformation of India Inc.
“The composition and performance of the Nifty 500 over the past 26 years highlight the structural transformation of corporate India—from a commodity- and manufacturing-heavy universe at the turn of the millennium to one increasingly driven by financial intermediation, services and importantly, domestic demand,” an NSE report noted.
Shift in leadership
The NSE report highlights that financials have emerged as the defining growth story over the year, as the sector’s representation and market capitalisation have increased from 8% of index constituents and 7% of market capitalisation in March 2000 to 20% and 26%, respectively, by March 2026.
The financial sector also overtook energy as the largest contributor to revenues in FY25, ending more than two decades of the energy sector’s leadership, the report highlighted.
Traditional sectors such as materials and consumer staples gradually ceded ground, while healthcare, utilities, and consumer discretionary gained prominence, reflecting rising incomes, urbanisation and greater formalisation of the economy, said the report.
Meanwhile, the earnings growth of Nifty 500 has outpaced its revenue expansion during the past 26 years.
The NSE report showed that between FY03 and FY26, aggregate net sales of Nifty 500 companies increased 21-fold, while PAT rose 31-fold.
The aggregate PAT margin improved from 6% in FY00 to 10.9% in FY26, reflecting sustained improvements in operating efficiency and profitability across business cycles.
“The expansion was equally visible across the market-cap spectrum, with the thresholds for large- and mid-cap classification rising 122-fold and 180-fold, respectively, underscoring both the growing scale of listed companies and continued mobility across the broader market,” said the report.
Broadening earnings growth
An important point the NSE report highlights is the broadening of corporate performance and earnings growth beyond the heavyweight companies in the Nifty 50 index.
“The Nifty 50’s share of aggregate Nifty 500 profits fell sharply from 87% in FY18 to 51% in FY26, while the broader universe delivered a superior PAT CAGR of 16.9% during FY17–FY26 (versus 12.5% for the Nifty 50), against 14.4% in the preceding decade, indicating that earnings growth has become increasingly broad-based even as headline revenue growth moderated,” said the report.
“Concentration indicators reinforce this trend. The Herfindahl-Hirschman Index (HHI) for Nifty 500 net sales declined from 185 in FY00 to a record low of 88 in FY26, while concentration in EBITDA and PAT fell from 46 to 20 and from 225 to 80, respectively,” the report added.
Financials, utilities, and consumer staples were the sectors with the sharpest sectoral broadening.
The long-term earnings growth trajectory has been positive despite major macroeconomic and geopolitical shocks, such as the dotcom downturn, the global financial crisis, and the COVID-19 pandemic, during the period.
The last 26-year journey shows that the domestic market is now structurally deeper and more diversified, where corporate revenues, profits, and market value are distributed across companies and sectors. This provides a more balanced and durable foundation for India’s corporate earnings cycle, the report said.
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