Nifty 50 Rejig: Zomato & Jio Financial Services to Replace BPCL, Britannia – What It Means for Investors
BPCL : The Nifty 50 index is set for a major reshuffle as food delivery giant Zomato and Jio Financial Services will replace Bharat Petroleum Corporation Limited (BPCL) and Britannia Industries. This change will take effect on March 28, 2025, with adjustments being made on March 27, coinciding with the derivative expiry.
The semi-annual rebalancing of Nifty Indices is a routine exercise by the National Stock Exchange (NSE) to ensure the index reflects the most significant and dynamic stocks in the Indian stock market. The upcoming changes will have far-reaching impacts on passive inflows, index weightage, and valuation metrics.
Impact of Nifty 50 Reshuffle
Passive Inflows & Outflows
With Zomato and Jio Financial Services entering the index, there will be significant passive inflows, particularly from index funds and ETFs that track the Nifty 50. As per estimates by Nuvama Alternative & Quantitative Research, the expected inflows and outflows are:
| Stock | Inflows/Outflows ($ Million) |
|---|---|
| Zomato (Inflow) | 602 |
| Jio Financial Services (Inflow) | 308 |
| Britannia (Outflow) | -238 |
| BPCL (Outflow) | -225 |
Passive funds that replicate the Nifty 50 will adjust their portfolios accordingly, leading to increased buying in Zomato and Jio Financial Services, while selling pressure will mount on Britannia and BPCL.
Nifty 50 Weightage Adjustments
Apart from the inclusion of Zomato and Jio Financial Services, the weightage of Grasim Industries, Adani Enterprises, UltraTech Cement, and Cipla will see a slight increase, leading to moderate inflows into these stocks.
Conversely, major financial and tech heavyweights such as Bajaj Finance, HDFC Bank, Reliance Industries, ICICI Bank, and Infosys will see a decline in their weightage, resulting in outflows.
| Stock | Change in Weightage ($ Million) |
|---|---|
| Grasim Industries (Increase) | +9 |
| Adani Enterprises (Increase) | +9 |
| UltraTech Cement (Increase) | +6 |
| Cipla (Increase) | +5 |
| Bajaj Finance (Decrease) | -79 |
| HDFC Bank (Decrease) | -51 |
| Reliance Industries (Decrease) | -41 |
| ICICI Bank (Decrease) | -35 |
| Infosys (Decrease) | -24 |
These changes could impact stock price movements, as higher weightage usually leads to greater demand from institutional investors.
Impact on Nifty 50 Valuation
The inclusion of high price-to-earnings (P/E) stocks like Zomato and Jio Financial Services is expected to increase the overall P/E ratio of the index.
| Metric | Before Rejig | After Rejig |
|---|---|---|
| Nifty 50 P/E (FY26) | 19.9x | 20.2x |
| Nifty 50 P/E (FY27) | 17.5x | 17.7x |
| Estimated EPS (FY26) | ₹1,186 | ₹1,171 |
| Estimated EPS (FY27) | ₹1,349 | ₹1,335 |
With the inclusion of growth-oriented stocks, Nifty 50 may become more expensive in valuation terms, making it important for investors to monitor earnings growth trends.
Changes in Other Nifty Indices
Bank Nifty Adjustments
Several public sector banks will gain more weight in the Bank Nifty index, while private lenders will see a decline.
| Bank | Weightage Impact |
|---|---|
| Federal Bank (Increase) | ✅ Positive |
| SBI (Increase) | ✅ Positive |
| IndusInd Bank (Increase) | ✅ Positive |
| Kotak Mahindra Bank (Decrease) | ❌ Negative |
| ICICI Bank (Decrease) | ❌ Negative |
| HDFC Bank (Decrease) | ❌ Negative |
Nifty Next 50 Rejig
Stocks removed from Nifty 50 (BPCL & Britannia) will move to Nifty Next 50. Other additions include Indian Hotels, CG Power, Hyundai Motor India, Bajaj Housing Finance, and Swiggy.
Stocks exiting Nifty Next 50:
- Zomato, Jio Financial Services, BHEL, NHPC, Union Bank of India, IRCTC, Adani Total Gas.
What Does This Mean for Investors?
- Passive Inflows Will Drive Volatility
Stocks entering the index (Zomato & Jio Financial Services) will see increased buying activity, while those being removed (BPCL & Britannia) may face short-term selling pressure. - Valuation Impact on Nifty 50
The index will become more expensive, requiring higher earnings growth to sustain current levels. - Bank Nifty Reallocation Benefits PSBs
SBI, Federal Bank, and other PSU banks could gain momentum, while private lenders Kotak, ICICI, and HDFC Bank may see weightage reductions. - Opportunities in Nifty Next 50
Investors in BPCL & Britannia may still find opportunities in Nifty Next 50, where these stocks could remain attractive.
Frequently Asked Questions (FAQs)
1. Why are Zomato and Jio Financial Services being added to Nifty 50?
Nifty 50 is rebalanced semi-annually based on market capitalization and liquidity. Zomato and Jio Financial Services have grown significantly, meeting the inclusion criteria.
2. How will this change impact investors?
Stocks entering Nifty 50 will see increased passive inflows, leading to short-term buying pressure. Stocks being excluded (BPCL & Britannia) may see temporary outflows.
3. What does this mean for Nifty 50’s valuation?
With Zomato and Jio Financial Services, Nifty 50’s P/E ratio will rise, making the index slightly more expensive.
4. Will Britannia and BPCL still be investable?
Yes, they are moving to Nifty Next 50, where they may still attract institutional interest.
5. What should investors do?
- Long-term investors should monitor index changes but focus on company fundamentals.
- Short-term traders may find opportunities in stocks with passive inflows & outflows.
Conclusion
The upcoming Nifty 50 rejig will bring significant changes to the index, affecting passive flows, stock weightage, and overall market dynamics. Investors should keep an eye on new entrants (Zomato & Jio Financial Services) and their potential impact on Nifty 50 valuations. Additionally, tracking Bank Nifty and Nifty Next 50 changes can offer further investment insights.
By understanding these shifts, investors can make informed decisions and capitalize on emerging market trends.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.