In the upcoming index rejig for the NSE benchmark Nifty 50, Trent and Bharat Electronics (BEL) are anticipated to replace LTIMindtree and Divi’s Labs, according to Nuvama Alternative & Quantitative Research.
The potential changes are contingent on the approval of futures and options (F&O) inclusion for Zomato and Jio Financial Services (JFS) by the Securities and Exchange Board of India (SEBI) before the announcement by NSE indices in August.
What Will Be Impact of SEBI’s F&O Inclusion Decisions
Nuvama’s latest note indicates that should SEBI approve futures and options (F&O) inclusion for Zomato Ltd and Jio Financial Services (JFS), these stocks would be more likely to enter the Nifty 50 index.
The base case scenario suggests significant market impacts, with Trent Ltd potentially attracting passive inflows of around $500 million, and Bharat Electronics (BEL) seeing inflows of approximately $440 million.
In contrast, LTIMindtree and Divi’s Labs, anticipated to exit the index, could face passive outflows of $210 million and $260 million, respectively. These potential changes reflect the broader implications of SEBI’s F&O inclusion decisions on the index composition and market movements.
SEBI Approval and Future Prospects
Currently, over 70 stocks qualify for F&O inclusion based on quantitative criteria but have not been included due to SEBI’s pending approvals. Nuvama highlighted that SEBI has not approved any new F&O inclusions in recent years.
However, SEBI’s chief recently indicated that a few new stocks might be introduced into the derivatives segment using revised methodologies.
Nifty Bank and Nifty Next 50 Rejig Predictions
Should Zomato and JFS receive F&O inclusion, the Nifty 50 could see Trent, JFS, and possibly other stocks enter the index, with LTIMindtree, Divi’s Labs, and potentially BPCL being excluded.
The inclusion and exclusion decisions will consider the average market-cap cut-off until the end of July. The official announcement is expected in the latter half of August, with adjustments taking effect on September 30.
Nuvama’s forecast for the Nifty Bank index suggests that Canara Bank may replace Bandhan Bank in the upcoming rejig. This anticipated change reflects adjustments based on market performance and index requirements.
For the Nifty Next 50, potential new additions include JSW, NHPC, Union Bank, Hindustan Zinc, and Indian Overseas Bank. On the other hand, possible exclusions could involve Colgate-Palmolive, SRF, MRPL, SBI Card, and Berger Paints.
The inclusion of Divi’s Labs, LTIMindtree, and BPCL in the Nifty Next 50 will be contingent on the final decisions made during the Nifty rejig process.
