In the upcoming semi-annual index reviews, newly listed stocks Zomato, One97 Communications (Paytm), FSN E-Commerce Ventures (Nykaa) will be included in the Nifty Next 50 index. The revised list, which will be effective from March 31, also incudes SRF, Indian Oil and Mindtree, which may see inflows of $47 million, $40 million and $33 million, respectively.
According to market experts, the latest modification in criteria announced by the stock exchange has paved way for these stocks, which got listed last year, to enter the index.
The Index Maintenance Sub-Committee – Equity (IMSC) of NSE Indices Limited has decided to make the changes in eligibility criteria of Nifty equity indices and replacement of stocks in various indices as part of its periodic review as listed hereunder. These changes shall become effective from March 31, 2022, NSE announced in a circular on Thursday. The new eligibility criteria mentions that the constituents should have a minimum listing history of one calendar month as on the cut-off date vs earlier requirement of 3 months. This has paved the way for stocks like Nykaa, Paytm, Policybazaar and Latent View which got listed after October 2021.
Six stocks – Nykaa, Indian Oil Corporation (IOC), MindTree Ltd, Paytm, SRF Ltd and Zomato Ltd will replace Apollo Hospitals Enterprise, Aurobindo Pharma HPCL, IGL, Jindal Steel & Power and Yes Bank from the Nifty Next 50 index.
Further, Apollo Hospitals will replace IOC in the Nifty 50 index, whereas, within Nifty Bank, Bank of Baroda will be included as RBL Bank gets excluded from the banking index. In Nifty Midcap100 index, ABB India, Clean Science, IDBI Bank, IEX, Max Health, PB Fintech, Trident and Yes Bank are among new inclusions, whereas Ajanta Pharma, Castrol India, City Union Bank, Hindustan Copper, IRFC, Pfizer will make an exit.
Abhilash Pagaria, Head, Alternatives research, Edelweiss Securities, said: “Nifty Indices Rebalance has come in line with Edelweiss predictions. In Nifty 50- Apollo Hospital will see inflow of $143 bn while Indian Oil will be removed and it will see outflow of $91 mn. Within Nifty Bank, Bank of Baroda will gain $53 mn while RBL will see outflow of $23 mn”
What Does Listing of Shares Like Zomato, Paytm, Nykaa Mean for Investors?
New Home in Various ETFs
Gaurav Garg, Capitalvia, said that this is a positive news as a lot of index funds and ETFs will now do churning and include these stocks in their portfolio.
Divam Sharma, Founder at Green Portfolio, SEBI Registered Portfolio Management Service Provider, said: “This addition will give the much-needed push to the new age start-ups which have faced the burnt post their debut over the last few months. There are many ETFs and active funds which follow Nifty next 50 index for allocating capital. These high-growth tech businesses have disrupted the ecosystem and established a large market share. We have seen the market take time to adjust the valuations of these companies. However, the investor interest to invest in such companies is prevalent. We believe that many of such companies will lead their way to Nifty in the coming years, replacing the traditional business models.”
Only for the High-Risk Appetite Investors
Ashis Sarangi, SEBI Registered Investment Advisor at Pickright Technologies, said: “Due to the fact that ETF managers are required to buy these shares, which may increase volume for the equities, there may be a little upward price movement while rebalancing. Still, we believe that, at this point in time, only investors with a high-risk appetite should consider buying these stocks in a SIP mode, with a 2 per cent – 4 per cent allocation in the portfolio. The current correction has provided the investors with better stock investment opportunities against these companies.”
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