Zomato, Jio Financial Services Shares Surge Ahead of Nifty 50 Entry, Set to Attract Over $900 Million Inflows
Jio Financial Services : In a major boost for Indian stock market investors, Zomato and Jio Financial Services witnessed a strong rally in early trade on Thursday ahead of their much-anticipated inclusion in the benchmark Nifty 50 index. The move is expected to trigger massive passive fund inflows, reinforcing confidence in these stocks.
Market Performance: Zomato and Jio Financial Gain Momentum
Both stocks experienced notable gains in early trading:
- Zomato share price jumped 2.68% to reach ₹208.75 per share.
- Jio Financial Services (JFS) share price rose 1.95% to ₹226.75 per share on the Bombay Stock Exchange (BSE).
The positive momentum reflects growing investor optimism as Zomato and JFS will officially join the Nifty 50 index on March 28, 2025. The index rebalancing process will take place on March 27, 2025, making way for these two new entrants.
Why Is This Nifty 50 Inclusion Significant?
The Nifty 50 index is India’s premier stock market benchmark, followed by passive investors, mutual funds, and exchange-traded funds (ETFs). Stocks included in the index typically see higher trading volumes and increased fund inflows.
Replacement Details:
- Zomato will replace Bharat Petroleum Corporation Ltd (BPCL).
- Jio Financial Services will take the spot of Britannia Industries.
As a result, these stocks are expected to witness significant institutional buying in the coming days.
Massive Fund Inflows Expected: Over $900 Million on the Way
The inclusion of Zomato and Jio Financial in Nifty 50 is anticipated to bring over $900 million in passive fund inflows, further boosting their stock prices.
According to Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research:
- Zomato is expected to attract around $602 million in passive fund inflows.
- Jio Financial Services is likely to see inflows of approximately $308 million.
On the flip side, the exclusion of BPCL and Britannia is expected to lead to significant outflows:
- Britannia Industries may see an estimated outflow of $238 million.
- BPCL could witness outflows of $225 million.
Market Impact: Winners and Losers
The news of exclusion from Nifty 50 weighed down BPCL and Britannia stocks, with both witnessing marginal declines in Thursday’s trading session.
Meanwhile, despite the positive sentiment, Zomato has fallen by 11% in the last month and is down 26% year-to-date (YTD). Jio Financial Services has remained relatively stable, gaining 1% in the past month, though it has declined 26% YTD.
At 10:00 AM, stock performance was as follows:
- Zomato was 0.84% higher at ₹205.00 per share.
- JFS traded 1.26% higher at ₹225.20 per share.
Financial Ratios of Zomato and Jio Financial Services
To help investors evaluate these stocks better, here’s a comparison of key financial metrics:
| Metric | Zomato | Jio Financial Services |
|---|---|---|
| Current Market Price | ₹205.00 | ₹225.20 |
| Market Capitalization | ₹1.76 lakh crore | ₹1.43 lakh crore |
| Price-to-Earnings (P/E) Ratio | 142x | 28x |
| Price-to-Book (P/B) Ratio | 7.5x | 1.9x |
| Return on Equity (ROE) | 2.3% | 8.4% |
| Year-to-Date (YTD) Performance | -26% | -26% |
| 1-Month Performance | -11% | +1% |
What’s Next for Investors?
The inclusion in Nifty 50 is a strong indicator of a company’s market stability and growth potential. Investors expecting short-term gains might see increased volatility around the rebalancing date, while long-term investors could benefit from the improved liquidity and institutional support.
Key Takeaways
- Zomato and Jio Financial Services are set to be included in Nifty 50 on March 28, 2025.
- Passive fund inflows exceeding $900 million are expected.
- Zomato will replace BPCL, while Jio Financial will replace Britannia.
- Both stocks surged ahead of their inclusion, with Zomato rising 2.68% and JFS gaining 1.95%.
- BPCL and Britannia are expected to see capital outflows, potentially affecting their stock prices negatively.
Q&A Section: Everything You Need to Know
1. Why are Zomato and Jio Financial Services gaining today?
They are set to be included in the Nifty 50 index, which is expected to drive significant passive fund inflows of over $900 million.
2. When will Zomato and Jio Financial Services officially enter Nifty 50?
The stocks will be included in the Nifty 50 index on March 28, 2025, after adjustments on March 27.
3. Which companies are being removed from the Nifty 50 index?
BPCL and Britannia Industries will be removed from the Nifty 50 index to make way for Zomato and JFS.
4. How much fund inflows are expected for Zomato and Jio Financial Services?
- Zomato is expected to receive $602 million in inflows.
- Jio Financial Services is likely to attract $308 million.
5. How are BPCL and Britannia affected by this exclusion?
The exclusion could lead to capital outflows of:
- $238 million from Britannia
- $225 million from BPCL Their stock prices may see some downward pressure.
6. Is this a good time to invest in Zomato or Jio Financial Services?
Inclusion in Nifty 50 generally enhances a stock’s liquidity and stability. However, Zomato has declined 26% YTD, and JFS has also fallen 26% YTD, so investors should carefully analyze their growth potential and market trends before making decisions.
7. What financial ratios should investors consider before investing?
Key metrics include:
- Zomato’s P/E ratio is 142x, indicating a high valuation.
- Jio Financial’s P/E ratio is 28x, which is more reasonable.
- Zomato’s ROE is 2.3%, while Jio Financial’s is 8.4%. These factors can help investors assess risk vs. reward before investing.
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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.