The Nifty index undergoes semi-annual rebalancing, managed by NSE Indices Limited. The cut-off dates for this rebalancing are 31st January and 31st July, with the six-month average data leading up to these dates serving as the basis for evaluation. The market is provided with a four-week advance notice before any changes take effect.
To be eligible for inclusion in the Nifty 50 index, stocks must meet specific criteria set by NSE Indices. A stock must have traded at an average market impact cost of 0.5 percent, or lower during 90 percent of trading observations over the past six months, based on a basket size of Rs. 10 crores. Additionally, the stock must be a part of the futures and options (F&O) segment to be included in the Nifty 50 index.
The official announcement of changes to the Nifty indices is expected in February 2025, with changes taking effect on 31st March 2025. For the March rebalancing, the index adjustments are based on the average free-float market capitalization observed between 1st August and 31st January.
Brokerage Report:
A report by domestic brokerage JM Financial highlighted that Zomato Limited and Jio Financial Services are likely to be added to the Nifty 50 index during the upcoming rebalancing.
In contrast, JM Financial expects Britannia Industries, a leading FMCG company, and Bharat Petroleum Corporation Limited (BPCL), a key player in oil marketing, may be removed from the index.
Previously, the brokerage Nuvama Alternative and Quantitative Research anticipated the exclusion of Eicher Motors, an automotive company, from the index instead of Britannia Industries.
The potential inclusion of Zomato and Jio Financial Services in the Nifty 50 follows the NSE’s announcement in November 2024, stating that 45 stocks, including these two companies, would be added to the F&O segment.
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1. Zomato Limited
With a market cap of Rs. 2.32 lakh crores, the shares of this food delivery player and restaurant aggregator surged by nearly 3.3 percent on BSE, reaching Rs. 241.5 during Wednesday’s morning trading session.
The stock hit its 52-week high at Rs. 304.5 on 5th December 2024, and compared to its current trading price of Rs. 241, the stock is trading at a discount of nearly 21 percent.
According to JM Financial’s projections, based on the average free-float market capitalization, significant fund flows could result from these anticipated changes. If Zomato is included, it is expected to attract passive inflows of $620 million (or Rs. 5,364 crores), involving ~22.6 crore equity shares, according to sources.
2. Jio Financial Services Limited
With a market cap of Rs. 1.74 lakh crores, the shares of a new-age institution providing full-stack financial services to customers surged nearly 1.3 percent on BSE to Rs. 276.6 during Wednesday’s morning trading session.
The stock hit its 52-week high at Rs. 394.7 on 23rd April 2024, and compared to its Tuesday closing price of Rs. 275, the stock is trading at a discount of nearly 30 percent.
According to reports, the inclusion of Jio Financial Services in the index could bring inflows of $356 million (or Rs. 3,080 crores), involving ~10.9 crore equity shares.
On the other hand, potential exclusions may result in outflows. If BPCL is removed, it could lead to outflows of $212 million (or Rs. 1,833 crores), involving ~6.46 crore shares. Similarly, the exclusion of Britannia Industries could cause outflows of $229 million (or Rs. 1,981 crores), affecting ~39 lakh equity shares.
Written by Shivani Singh
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