Ahead of the forthcoming NIFTY 50 index rejig (June 27, 2025), a number of large-cap Indian stocks are likely to see a change in their weightages, triggering passive flows from funds tracking the index.
As per Nuvama Alternative & Quantitative Research, some companies will benefit from an increase in weightage that will lead to a sizeable inflow, and others will see a small outflow due to reduced weightage in the index.
What is INDEX rejig?
The NIFTY 50 index is reviewed regularly to ensure that the companies listed in the index represent the top-performing and most liquid companies on the exchange.
Stocks may be added or dropped, or the weightings may be changed for stocks based on market cap, trading volumes, free float, and sector representation. These changes impact how index-tracking funds need to adjust their portfolios and may lead to passive inflows and outflows.
Stocks to see inflows
According to Nuvama Alternative & Quantitative Research, there are likely to be passive inflows in several frontline Indian equities as a result of index changes. ICICI Bank is expected to see Rs 281.32 crore of inflows; followed by Bharti Airtel which is receiving inflows of about Rs 272.8 crore; Bajaj Finance will see an estimated Rs 127.88 crore of inflows; Ultratech Cement will see inflows of Rs 93.78 crore, and Wipro will see relatively minimal inflows of Rs 8.52 crore. HDFC Bank, which has a minor weight increase in the Nifty Bank Index, will see about Rs 85.25 crore of inflows.
Stocks to see outflows
Some companies can expect some passive outflows due to the same index rejig. Mahindra & Mahindra will see an outflow of approximately Rs 59.67 crore, and likely outflows of around Rs 42.63 crore for Infosys.
ITC, meanwhile, should see a cut of about Rs 34.10 crore, which is also not as significant, a notable drop in weight. These are normal passive fund rebalancing, especially by passive funds tracking benchmark indices.
NIFTY 50 is a stock market index that reflects the performance of the top 50 large companies on the National Stock Exchange (NSE) of India. NIFTY 50 encompasses businesses from different sectors such as banking, information technology, oil & gas, FMCG, etc.
It is a useful index to track the overall health and direction of the Indian stock market. NIFTY 50 is also a benchmark to assess trailing performance. The NIFTY 50 is updated from time to time based on a company’s performance and market capitalisation.
Written by Satyajeet Mukherjee
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