The NIFTY50 rejig on Mar 28 is set to bring notable changes to the NSE benchmark index. As part of the semi-annual review conducted by the National Stock Exchange (NSE), Zomato Ltd and Jio Financial Services Ltd (JFS) are poised to replace Bharat Petroleum Corporation Ltd (BPCL) and Britannia Industries. These changes will be effective from March 28, with adjustments being made post-market hours on March 27.
This shift is expected to lead to high inflows for the new entrants, while BPCL and Britannia Industries are likely to experience significant outflows. Let’s dive into the details of these changes, explore the reasons behind the reshuffle, and analyze the expected market impact.
NIFTY50 Rejig on Mar 28: Zomato, Jio Fin Services to Replace BPCL, Britannia Industries on the Benchmark Index, Check Details
The upcoming NIFTY50 rejig on Mar 28 will mark the entry of Zomato and Jio Financial Services (JFS) into the NSE benchmark index. These changes align with NSE’s goal to reflect market trends and ensure the index remains relevant to investors. As a result, BPCL and Britannia Industries will exit the NIFTY50 and move to the NIFTY Next 50 Index.
Why Are Zomato and Jio Fin Services Entering NIFTY50?
Zomato’s inclusion is a result of its consistent performance in the food delivery sector and its growing market capitalization. Similarly, JFS, a spin-off from Reliance Industries Ltd, has made a strong entry into the financial services sector, warranting its position in the NIFTY50.
Why Are BPCL and Britannia Industries Being Replaced?
BPCL and Britannia Industries are being replaced due to a decline in their relative market capitalization and trading volumes compared to their peers. Moving to the NIFTY Next 50 Index will allow these companies to maintain visibility while opening space for high-performing stocks like Zomato and JFS.
Stock Performance Before the NIFTY50 Rejig
Jio Financial Services Performance
As of the intraday trading on Thursday, Jio Financial Services shares were trading 0.18% higher at ₹223.06 per share on the NSE.
Zomato’s Stock Performance
Zomato, a key player in India’s food delivery space, saw its shares trade at ₹203.73 per share, with a marginal rise of 0.22%.
Impact on BPCL and Britannia Industries
BPCL and Britannia Industries, after being excluded from NIFTY50, are expected to witness significant outflows. This change is likely to impact their stock performance in the short term.
Stocks to See Increased Weightage on NIFTY50
Several stocks are expected to witness increased weightage after the NIFTY50 rejig on Mar 28. The major beneficiaries include:
| Stock | Increased Inflows |
|---|---|
| Grasim Industries | $9 million |
| Adani Enterprises | $9 million |
| UltraTech Cement | $6 million |
| Cipla | $5 million |
Stocks to See Decreased Weightage on NIFTY50
Conversely, some major players will experience a decline in their weightage:
| Stock | Outflows |
|---|---|
| Bajaj Finance | -$79 million |
| HDFC Bank | -$51 million |
| Reliance Industries | -$41 million |
| ICICI Bank | -$35 million |
| Infosys | -$24 million |
Why Does NIFTY50 Go Through a Rejig?
The NIFTY50 rejig is conducted semi-annually to ensure that the index accurately mirrors market trends and remains a reliable benchmark for investors. Companies are assessed based on market capitalization, liquidity, and trading volumes to determine their inclusion or exclusion.
How Often Does NIFTY50 Rebalance?
The rebalancing occurs twice a year, typically in March and September. These periodic adjustments help maintain the index’s relevance and align it with the latest market conditions.
Changes in Other Indices After NIFTY50 Rejig
The NIFTY50 rejig on Mar 28 will also trigger changes in other indices, including:
NIFTY100 Index Changes
Inclusions:
-
Indian Hotels Ltd
-
Bajaj Housing Finance Ltd
-
Hyundai Motor India Ltd
-
CG Power
Exclusions:
-
Bharat Heavy Electricals Ltd (BHEL)
-
Indian Railway Catering and Tourism Corporation Ltd (IRCTC)
-
Adani Total Gas Ltd
Major Changes in NIFTY500 Index
The NIFTY500 Index will also see notable inclusions and exclusions.
Inclusions:
-
Ola Electric Mobility Ltd
-
NTPC Green Energy Ltd
-
Afcons Infrastructure Ltd
-
Sagility India Ltd
-
Waaree Energies Ltd
-
ACME Solar Holdings Ltd
-
Vishal Mega Mart Ltd
Exclusions:
-
Easy Trip Planners Ltd
-
Metro Brands Ltd
-
TVS Supply Chain Solutions Ltd
BPCL and Britannia Industries to Join NIFTY Next 50
After exiting the NIFTY50 index, BPCL and Britannia Industries will move to the NIFTY Next 50 Index. They will be joined by Indian Hotels Company, Hyundai Motor India, Bajaj Housing Finance, and Swiggy.
Stocks to Exit NIFTY Next 50 Index
Key exclusions from the NIFTY Next 50 Index include:
-
Bharat Heavy Electricals Ltd (BHEL)
-
NHPC
-
Union Bank of India
-
Indian Railway Catering and Tourism Corporation (IRCTC)
-
Adani Total Gas
Impact of NIFTY50 Rejig on Mutual Funds and ETFs
Mutual funds and ETFs tracking the NIFTY50 Index will have to rebalance their portfolios to align with the changes. This could result in increased buying of Zomato and JFS shares while reducing exposure to BPCL and Britannia Industries.
Impact on Retail and Institutional Investors
Retail and institutional investors will also feel the impact of these changes. While institutional investors may rebalance their portfolios quickly, retail investors should closely monitor the performance of the new entrants and adjust their holdings accordingly.
Effect on Sectoral Allocation Post-Rejig
Increased Exposure to Technology and Financial Services
With the inclusion of JFS, the financial services sector will see increased representation in the NIFTY50. Zomato’s inclusion will further boost the technology and e-commerce segments.
Decline in Energy and FMCG Weightage
The removal of BPCL and Britannia Industries will reduce the weightage of the energy and FMCG sectors, altering the overall sectoral balance.
Historical Perspective: How Has NIFTY50 Rejig Impacted Stocks?
In previous rejigs, companies entering the NIFTY50 have often witnessed a positive impact on their stock prices due to increased buying activity from institutional investors. Conversely, companies exiting the index tend to experience short-term pressure on their stock performance.
Future Outlook for Zomato and Jio Financial Services
Zomato’s Growth Prospects
Zomato’s growing dominance in India’s food delivery sector, coupled with diversification into quick commerce, positions it well for long-term growth. Its inclusion in the NIFTY50 could further boost investor confidence.
Jio Financial Services’ Expansion Plans
JFS, with its strong backing from Reliance Industries, is set to revolutionize India’s financial services space. Its inclusion is expected to attract significant institutional interest.
FAQs
1. What is the NIFTY50 rejig on Mar 28?
The NIFTY50 rejig on Mar 28 involves replacing BPCL and Britannia Industries with Zomato and Jio Financial Services in the NSE benchmark index.
2. Why were BPCL and Britannia Industries excluded from NIFTY50?
BPCL and Britannia Industries were excluded due to their declining market capitalization and reduced trading volumes compared to other contenders.
3. How does the NIFTY50 rejig affect mutual funds and ETFs?
Mutual funds and ETFs tracking the NIFTY50 will need to rebalance their portfolios, increasing exposure to Zomato and JFS while reducing exposure to BPCL and Britannia.
4. What are the major changes in the NIFTY100 and NIFTY500 indices?
The NIFTY100 and NIFTY500 indices will witness multiple inclusions and exclusions, with notable additions such as Indian Hotels, Bajaj Housing Finance, and Ola Electric.
5. Will BPCL and Britannia Industries remain in any other index?
Yes, BPCL and Britannia Industries will join the NIFTY Next 50 Index after their exclusion from the NIFTY50.
6. How often does the NIFTY50 go through a rejig?
The NIFTY50 undergoes rebalancing twice a year, typically in March and September, to ensure the index reflects market changes.
Conclusion
The NIFTY50 rejig on Mar 28 brings a wave of change to India’s benchmark index, with Zomato and Jio Financial Services taking center stage. As BPCL and Britannia Industries make way for these dynamic companies, the reshuffle aims to reflect evolving market trends and maintain the index’s relevance. Investors should keep a close watch on the performance of these new entrants and assess their portfolios to stay ahead in this ever-changing market landscape.
Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius
