The National Stock Exchange (NSE) has announced significant updates to its benchmark index, with Zomato and Jio Financial Services set to replace Britannia Industries and Bharat Petroleum Corporation Ltd (BPCL) in the Nifty 50 index starting March 28th, 20251. This change is a result of the semi-annual review process.
Why the Change?
Zomato and Jio Finance are joining the benchmark because their six-month average free-float market capitalization ratio is greater than 1.5 times the capital value of both BPCL and Britannia Industries. Additionally, to qualify for NSE index membership, stocks need to be traded within the NSE Futures & Options segment.
Stock Performance and Market Impact
Here’s a quick look at how the stocks of the incoming and outgoing companies have been performing:
- Zomato: In the five trading days before the announcement, Zomato’s stock price increased by 6.5%, with a 6.6% monthly rise. However, investors saw losses of 11.4% over the six-month period. Over the previous year, Zomato’s stock value increased by 40%.
- Jio Financial Services : The share value of Jio Financial Services increased by approximately 5% in the five business days leading up to the announcement. Despite this, the stock price dropped by 4.6% in the previous month and lost 28% of its value in six months. Since the beginning of the previous year, Jio Financial Services experienced a 29% decline in its stock value.
- Market Impact: Analysts predict inflows of ₹3,128 crore for Jio Financial Services and ₹6,525 crore for Zomato. Passive trackers are expected to sell some of their shares due to the companies leaving the Next 50 index. BPCL and Britannia are anticipated to experience significant market selling of over ₹2,000 crore each due to their exit from the Nifty 50 index.
Strategic Advantages
The inclusion of Zomato and Jio Finance in the Nifty 50 index comes with several strategic advantages:
- Increased Exposure: Inclusion in the Sensex raises their exposure, boosting investor confidence among local and foreign institutions.
- Improved Market Liquidity: The stocks become more appealing to investors due to increased trading volumes, along with improved market liquidity.
- Upward Pressure on Stock Prices: Sensex-tracking funds, including mutual funds and exchange-traded funds (ETFs), and institutional investors will be required to invest in these stocks, potentially pushing their prices upward.
- Investor Confidence: Inclusion in the benchmark index generates confidence among investors regarding the companies’ financial health and market leadership.
Changes in Other Nifty Indices
Alongside the Nifty 50 changes, there are also updates in other NSE indices:
- Nifty 100: BHEL and IRCTC will be excluded, while Bajaj Housing Finance, CG Power and Industrial Solutions, and Hyundai Motor India are likely to be added. Other companies being removed from the index include Adani Total Gas, National Hydroelectric Power Corporation (NHPC), and the Union Bank of India.
- Nifty Midcap 150: Stocks of companies like Bayer Cropscience, CG Power and Industrial Solutions, Delhivery, IDBI Bank, Indian Hotels, Indian Overseas Bank, Metro Brands, Poonawalla Fincorp and nine other companies are excluded from the Nifty Midcap 150.
