Nifty50 Reshuffle Decision Expected Today: Will Zomato and Jio Financial Join the Elite Club?
India’s benchmark Nifty50 index is set for its semi-annual reshuffle on Friday, with expectations high for the inclusion of Zomato and Jio Financial Services. According to estimates from JM Financial, these stocks are strong contenders to enter the index, while Bharat Petroleum Corporation (BPCL) and Britannia Industries are likely to be removed. The Index Maintenance Sub-Committee of the National Stock Exchange (NSE) will meet after market hours today to finalize the adjustments, with an official announcement expected later in the evening.
Potential Impact on Stocks and Market Volumes
Expected Inflows and Outflows
As part of the Nifty50 rebalancing, index funds that track the benchmark will need to adjust their portfolios, leading to significant passive inflows and outflows. According to JM Financial projections:
- Zomato could receive passive inflows of $702 million, driven by institutional and exchange-traded fund (ETF) purchases.
- Jio Financial may see $404 million in inflows, as index-tracking funds increase their holdings.
- Bharat Petroleum (BPCL) and Britannia Industries, on the other hand, could face outflows of $240 million and $260 million, respectively, as they exit the Nifty50.
Estimated Trading Volumes
The reshuffle is expected to generate significant trading activity, as fund managers rebalance their portfolios ahead of the March 28, 2025, implementation date. JM Financial estimates that:
- Zomato could see approximately 277 million shares purchased by passive funds.
- Jio Financial may witness an inflow affecting around 154 million shares.
- Bharat Petroleum and Britannia could see approximately 78 million and 4.4 million shares being offloaded, respectively.
These volume changes could lead to short-term price movements, with stocks witnessing increased volatility in the coming sessions.
Understanding Nifty50’s Semi-Annual Rebalancing Process
Nifty50 undergoes a structured semi-annual rebalancing, managed by NSE Indices Ltd., a subsidiary of the National Stock Exchange (NSE). The index composition is reviewed based on:
- Market capitalization
- Trading liquidity
- Stock performance over the last six months
Key Timeline for the Nifty50 Reshuffle:
- Evaluation Cut-Off Dates: January 31 & July 31 each year.
- Advance Notice: NSE Indices provides a four-week window for participants to adjust.
- Effective Date: The changes take effect on March 28, 2025.
This process ensures that the Nifty50 remains an accurate representation of India’s top 50 companies, reflecting the latest market trends and economic shifts.
Why Are Zomato and Jio Financial Strong Contenders for Inclusion?
Zomato’s Rise as a Market Leader
- Zomato has seen strong revenue growth and profitability improvements, positioning itself as one of India’s leading tech-driven consumer businesses.
- In December 2024, Zomato became the first new-age tech stock to be included in the BSE Sensex, replacing JSW Steel.
- The company has attracted significant institutional investment, making it a strong candidate for Nifty50 inclusion.
Jio Financial’s Growing Institutional Interest
- Jio Financial Services, demerged from Reliance Industries in 2023, has rapidly expanded its presence in the financial services sector.
- The company has gained traction among institutional investors, driven by Reliance’s extensive ecosystem and digital finance push.
- Analysts believe Jio Financial’s inclusion in Nifty50 could lead to an increase in passive inflows, boosting its market performance.
What Happens When a Stock Joins or Leaves the Nifty50?
Impact of Inclusion
- Stocks that enter the Nifty50 typically experience a re-rating, as they attract increased institutional and ETF interest.
- Passive index funds buy large volumes of the newly included stock, often leading to price appreciation ahead of implementation.
- Inclusion in the index boosts brand credibility, making the stock more attractive to long-term investors.
Impact of Exclusion
- Stocks removed from Nifty50 tend to see short-term selling pressure, as index funds unwind their positions.
- Bharat Petroleum and Britannia may witness temporary price corrections, though long-term fundamentals remain key for investor sentiment.
- Exclusion can impact the liquidity and trading volumes of these stocks in the market.
Market Expectations and Investor Focus
Volatility Ahead of Announcement
With the NSE Indices set to announce changes later today, market participants will closely watch:
- How the final list aligns with brokerage estimates.
- Stock price movements in anticipation of passive inflows and outflows.
- Institutional investors adjusting their positions in response to the reshuffle.
Long-Term Market Implications
- Zomato and Jio Financial’s inclusion could reinforce the growing influence of new-age tech and financial services companies in India’s market.
- The exit of traditional players like BPCL and Britannia highlights the evolving nature of sectoral representation in Nifty50.
- With passive investing on the rise, index composition plays a crucial role in stock performance, making the Nifty50 reshuffle a key event for traders and institutional investors.
What to Watch for Next?
With the official announcement expected post-market hours, traders and investors should focus on:
- NSE’s final decision on inclusions and exclusions.
- Immediate stock price reactions and trading volume surges.
- Broader market sentiment regarding the reshuffle’s impact.
The upcoming changes will take effect on March 28, 2025, giving investors and fund managers time to reallocate portfolios accordingly. As India’s financial markets continue evolving, the Nifty50 reshuffle serves as a key indicator of emerging sectoral leadership and investment trends.
