Market Reaction to Nifty 50 Index Changes
The latest reshuffling of the Nifty 50 index saw Jio Financial Services (JFS) and Zomato debut as new entrants, while Britannia Industries and BPCL exited the benchmark index. The changes, which came into effect on March 28, sparked significant movement in the respective stocks, with Britannia and BPCL seeing a sharp rally post-exit, while the performance of the new entrants remained mixed.
JFS and Zomato’s inclusion in India’s premier stock market index was anticipated to attract significant passive inflows from exchange-traded funds (ETFs) and index funds, with estimates suggesting inflows of $602 million for Zomato and $308 million for Jio Financial Services. Meanwhile, the exclusion of Britannia Industries and BPCL was expected to lead to outflows of $238 million and $225 million, respectively, resulting in a temporary spike in their share prices as funds adjusted their portfolios accordingly.
Zomato and JFS Show Mixed Performance on Debut
On their first day as part of the Nifty 50 index, Jio Financial Services and Zomato exhibited contrasting movements in stock price. JFS saw a marginal gain of 0.6%, closing at ₹227.03 per share, while Zomato, which had initially posted gains during the intraday session, eventually ended lower by 2.5% at ₹201.2 per share. The mixed response was in line with expectations, as investors assessed the impact of their inclusion and adjusted their positions accordingly.
For Zomato, the decline could be attributed to profit-booking by investors, following a strong rally in recent sessions leading up to its inclusion in the benchmark index. On the other hand, Jio Financial Services, a relatively newer entity in the financial sector, is expected to witness long-term gains as its presence in the Nifty 50 index enhances its visibility among institutional investors.
Britannia and BPCL Rally Following Exit
Contrary to the downward movement in Zomato’s stock price, the stocks of Britannia Industries and BPCL surged following their exclusion from the Nifty 50 index. Britannia’s shares gained 2.3% to close at ₹4,950 per share on the NSE, while BPCL trimmed its intra-session gains but still ended the day with a 0.8% increase, closing at ₹278.35.
The rally in Britannia and BPCL shares is a classic example of post-exit volatility, where stocks that are removed from benchmark indices often see short-term buying interest from investors looking for value opportunities. Market analysts suggest that while passive outflows may put some pressure on the stocks in the coming days, Britannia and BPCL remain fundamentally strong businesses with long-term growth potential.
Impact on Nifty 50 and Sectoral Changes
The rejig in the Nifty 50 index has also led to weightage adjustments for several large-cap stocks, influencing fund allocations across major sectors. According to estimates by Nuvama Institutional Equities, the biggest beneficiaries of the reshuffle include:
Grasim Industries (+$9 million inflows)
Adani Enterprises (+$9 million inflows)
UltraTech Cement (+$6 million inflows)
Cipla (+$5 million inflows)
Conversely, some of the biggest losers in terms of weightage reduction and expected outflows include:
Bajaj Finance (-$79 million outflows)
HDFC Bank (-$51 million outflows)
Reliance Industries (-$41 million outflows)
ICICI Bank (-$35 million outflows)
Infosys (-$24 million outflows)
This shift highlights the ongoing sectoral rotation in the market, with traditional heavyweights such as banking and IT seeing a reduction in index weightage, while sectors like infrastructure, cement, and energy-related businesses gain prominence.
Changes in Bank Nifty Weightage
The Bank Nifty index, which tracks the performance of major banking stocks, also underwent a few key changes in weightage allocations. Stocks that saw an increase in weightage included:
State Bank of India (SBI)
Federal Bank
Bank of Baroda
IndusInd Bank
IDFC First Bank
Punjab National Bank (PNB)
AU Small Finance Bank
Canara Bank
Meanwhile, some of the largest private sector banks saw their weightages reduced, including:
Kotak Mahindra Bank
ICICI Bank
Axis Bank
HDFC Bank
These changes indicate a potential shift in market dynamics, where investors are focusing more on public sector and mid-tier banking stocks, while private sector banking leaders are seeing a reallocation of funds.
Outlook for New Entrants and Market Trends
With the inclusion of Jio Financial Services and Zomato in the Nifty 50 index, analysts believe that both stocks could witness continued interest from institutional investors, particularly index-tracking funds and passive investment strategies. Over the long term, the success of these new entrants will depend on their financial performance, earnings growth, and ability to maintain competitive market positioning.
For Zomato, profitability remains a key focus area, as the company aims to improve its unit economics and expand into high-margin businesses such as quick commerce. The stock’s recent inclusion in the Nifty 50 is expected to enhance investor confidence, but near-term volatility is likely as funds rebalance their portfolios.
For Jio Financial Services, the focus remains on scaling its non-banking financial services business, leveraging Reliance Group’s ecosystem and digital payment infrastructure. The company has already announced plans to expand its lending and insurance verticals, which could drive growth in the coming quarters.
As the market digests these Nifty 50 changes, traders and institutional investors will closely monitor the performance of both new entrants and exiting stocks, while broader index movements could signal emerging sectoral trends and fund flow shifts in the Indian stock market.
