Zomato & Jio Financial to Enter Nifty 50, BPCL & Britannia to Exit: Will It Trigger Volatility?
Introduction
Zomato : The National Stock Exchange (NSE) has announced a significant reshuffling in the Nifty 50 index, a move that could lead to increased market volatility. Effective from March 28, 2025, Zomato Ltd. and Jio Financial Services Ltd. will be included in the index, replacing Bharat Petroleum Corporation Ltd. (BPCL) and Britannia Industries Ltd..
This semi-annual rebalancing is based on the free-float market capitalization of companies over the past six months, ensuring that the index remains relevant by reflecting the largest and most liquid stocks in the market.
Why Are These Changes Happening?
Index rebalancing is done to maintain the accuracy of the Nifty 50 by adjusting for factors like market capitalization, liquidity, and sector representation. Stocks that no longer meet the criteria are replaced, allowing investors exposure to new, emerging large-cap companies.
The key reason for these changes is that the average free-float market capitalizations of Zomato (₹1,54,010.88 Cr.) and Jio Financial Services (₹74,779.95 Cr.) are at least 1.5 times that of the smallest companies being removed (BPCL – ₹48,507.53 Cr., Britannia – ₹56,495.46 Cr.). The selection is based on the average free-float market capitalization from August 1, 2024, to January 31, 2025.
Impact of These Changes
1. Market Inflows and Outflows
With their inclusion in Nifty 50, Zomato and Jio Financial Services are expected to witness strong buying interest from passive investors and exchange-traded funds (ETFs). On the flip side, BPCL and Britannia may experience outflows as funds tracking the Nifty 50 will be forced to exit these stocks.
- Zomato: Estimated inflows of $631 million (₹5,900 crore)
- Jio Financial Services: Estimated inflows of $320 million (₹3,000 crore)
- BPCL: Expected outflows of $201 million (₹1,900 crore)
- Britannia: Expected outflows of $240 million (₹2,300 crore)
These large fund movements could lead to short-term price fluctuations in the affected stocks.
2. Valuation Impact on Nifty 50
The inclusion of Zomato and Jio Financial Services will make Nifty 50 more expensive. Their trailing price-to-earnings (P/E) ratios are significantly higher compared to BPCL and Britannia:
| Company | P/E Ratio |
|---|---|
| Zomato | 320x |
| Jio Financial Services | 96x |
| BPCL | 8x |
| Britannia | 57x |
According to ICICI Securities, this could inflate Nifty 50’s overall P/E ratio by 2.5%, from 22.1x to 22.6x, making the index more expensive for investors.
3. Potential Market Volatility
- Increased Fluctuations: The inclusion of high-beta stocks like Zomato and Jio Financial Services, which are more sensitive to market movements, could increase volatility in Nifty 50.
- Sectoral Impact: The exit of BPCL will reduce oil & gas sector representation, while the addition of Zomato strengthens the tech-driven new-age business segment.
- Short-Term Price Swings: BPCL and Britannia could see a temporary price drop as ETFs and index funds exit these stocks, while Zomato and Jio Financial could rally ahead of the effective date.
Nifty Next 50 Changes
Apart from Nifty 50, changes have also been made in the Nifty Next 50 index:
New Additions: Bajaj Housing Finance, BPCL, Hyundai Motor India, Indian Hotels, Swiggy, CG Power, Britannia
Exclusions: Adani Total Gas, BHEL, IRCTC, Jio Financial, NHPC, Union Bank, Zomato
This reflects the growing influence of the hospitality, fintech, and automotive sectors in India’s stock market.
Stock Financials at a Glance
| Metric | Value |
|---|---|
| Market Cap | ₹1,08,788 Cr. |
| Current Price | ₹251 |
| 52-Week High/Low | ₹376 / ₹242 |
| Stock P/E | 7.77 |
| Book Value | ₹178 |
| Dividend Yield | 8.37% |
| ROCE | 32.1% |
| ROE | 41.9% |
| Debt to Equity | 0.76 |
| Industry PE | 19.7 |
| Intrinsic Value | ₹302 |
| RSI | 38.4 |
| EPS | ₹31.7 |
| Free Cash Flow (3 Yrs) | ₹42,199 Cr. |
| Debt | ₹58,880 Cr. |
Final Thoughts
The Nifty 50 reshuffle signals a shift towards new-age tech-driven companies, increasing the index’s valuation and potential volatility. While Zomato and Jio Financial Services could benefit from passive fund inflows, BPCL and Britannia may face temporary price pressure due to outflows.
For investors, this serves as a reminder that index changes can create short-term price movements but also long-term opportunities. Those looking for stability may consider BPCL and Britannia, while risk-tolerant investors might find Zomato and Jio Financial Services appealing due to their growth potential.
What do you think about this Nifty 50 reshuffle? Will it bring more volatility, or is it a step in the right direction? Share your views in the comments below!
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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.