By Consultants Review Team
India's benchmark Nifty50 index will undergo a semi-annual reshuffle on Friday, with Zomato and Jio Financial Services expected to be added and Bharat Petroleum Corporation and Britannia Industries likely to be dropped. The National Stock Exchange's (NSE) Index Maintenance Sub-Committee will meet after market hours today to finalize changes, with an official announcement expected later this evening.
The brokerage predicted that Zomato's inclusion in the index would result in passive inflows of $702 million, while Jio Financial could see inflows of $404 million as index funds adjusted their holdings. In contrast, Bharat Petroleum and Britannia Industries may see outflows of $240 million and $260 million, respectively, as they exit the 50-share benchmark.
The reshuffle is expected to result in significant trading volume. According to JM Financial, passive funds may purchase approximately 277 million shares of Zomato, while Jio Financial may experience inflows totaling 154 million shares. At the same time, Bharat Petroleum and Britannia may sell 78 million and 4.4 million shares, respectively, as funds tracking the Nifty 50 unwind their positions.
NSE Indices, a subsidiary of India's largest stock exchange, rebalances the Nifty semi-annually. The process has a set timeline, with January 31 and July 31 serving as the deadlines each year. To make sure the index represents current market trends, stocks are assessed according to their average performance over the preceding six months. Before making any changes, NSE Indices gives market participants four weeks' notice so they can make the necessary adjustments.
When Zomato replaced JSW Steel in a similar semi-annual rebalancing last December, it became the first new-age tech stock to be included in the BSE Sensex, highlighting its explosive rise. Jio Financial, a 2023 spinoff of Reliance Industries, is a strong contender for inclusion because it has also attracted institutional investors.
Stocks typically rerate when the Nifty 50 is added, and institutional interest, especially from ETFs and passive funds, rises. Prior to the rebalancing, which is scheduled to occur on March 28, 2025, stocks that have been added to the index have historically seen significant price movements.
Market participants will be watching closely as NSE Indices publishes the final list of inclusions and exclusions later today.
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