NSE Nifty 50 semi-annual index reconstitution will see Apollo Hospitals Enterprise enter the benchmark index, replacing PSU stock Indian Oil Corporation. The move is in line with expectations on Dalal Street. Inclusion in Nifty 50 is expected to result in inflows of $143 million towards Apollo Hospitals, according to analysts at Edelweiss Alternative Research. NSE has also made changes to the Bank Nifty index, Nifty Next 50, and Nifty 500 along with the midcap and smallcap indices. Changes announced yesterday to the various indices will come into effect from March 31, 2022.
Nifty 50 changes
Apollo Hospitals’ share price is down 8.9% so far this year amid the bearish momentum, trading at Rs 4,546 per share. However, the stock has rallied close to 50% in the last one year. Edelweiss expects $143 million worth of inflows towards Apollo Hospitals owing to the index changes. Indian Oil Corporation will exit the index, resulting in $91 million outflows. Indian Oil shares are flat so far this year, outperforming the benchmarks.
Bank Nifty rejig
RBL Bank stock will exit from the banking index, according to the latest changes. RBL Bank’s exclusion from the index is likely to result in outflows worth Rs 23 million. The stock is up 2.3% so far in 2022. Bank of Baroda will replace RBL Bank in the index, resulting in $53 million in inflows. Bank of Baroda’s share price has zoomed more than 26% this year.
Internet stocks enter Nifty Next 50
Internet stocks that have recently made debuts on the stock exchanges are set to enter the Nifty Next 50 index. NSE has decided to include Zomato, Paytm, and Nykaa along with three other stocks to the Nifty Next 50. Only those stocks that are part of the Nifty Next 50 index can enter the benchmark Nifty 50. Other stocks to be added to the index include Mindtree, SRF, and Indian Oil. Zomato is expected to see the largest fund inflows, among internet stocks, worth Rs 16.9 million.
Yes Bank, Hindustan Petroleum Corporation, Aurobindo Pharma, Jindal Steel, IGL, and Apollo Hospitals will exit the index.
NSE has also decided to make changes to the eligibility criteria for index rebalancing. “Importantly, the Index Maintenance -Committee – Equity (IMSC) of NSE Indices has decided to make the changes in the eligibility criteria of NIFTY equity indices. Now constituents should have a minimum listing history of 1 calendar month as on the cut-off date against the earlier requirement of 3 months,” said Abhilash Pagaria, Head, Alternatives research, Edelweiss Securities. “This has paved the way for stocks like Nykaa, Paytm, Policy Bazaar, and Latent View which got listed after October 2021. From a passive tracking perspective, new criteria have helped Nykaa and Paytm to get included in Nifty Next 50.”
