Shares of Yes Bank and Union Bank of India rose up to 3% on December 2 after the National Stock Exchange (NSE) announced that both lenders would be included in the Bank Nifty index effective December 31.
This inclusion makes them part of India’s most tracked banking index, which often drives institutional buying.

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NSE Confirms Bank Nifty Rebalancing From December 31 Strong Inflows Expected for Yes Bank and Union Bank HDFC Bank and ICICI Bank Likely to See Large Outflows Banking Heavyweights Slip Up to 1.3%Indian Bank Shares Fall 2.5% After Missing Inclusion

NSE Confirms Bank Nifty Rebalancing From December 31

NSE stated that the Bank Nifty composition will undergo a scheduled revision at the end of December.
As part of the rebalancing, the weightage of the top three constituents will be capped at 19%, 14%, and 10%, respectively.

This ensures the index remains balanced and prevents oversized influence from a few heavyweights.

Strong Inflows Expected for Yes Bank and Union Bank

According to Nuvama Alternative & Quantitative Research, the inclusion is expected to attract significant passive inflows:

Yes Bank: estimated inflows of $140 million
Union Bank of India: estimated inflows of $109 million

These inflows are expected due to index funds and ETFs that replicate the Bank Nifty basket.

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HDFC Bank and ICICI Bank Likely to See Large Outflows

On the other hand, the rebalancing could negatively impact the index giants.
Nuvama projects the following outflows due to reduced weightage:

HDFC Bank: $322 million estimated outflow
ICICI Bank: $348 million estimated outflow

This reweighting could result in selling pressure on these two major banks.

Banking Heavyweights Slip Up to 1.3%

Following the announcement, several large financial stocks saw mild weakness on December 2:

HDFC Bank: fell around 0.8%
ICICI Bank: declined about 1.3%
Axis Bank: also slipped between 0.8% and 1.3%

The market reaction reflected investor anticipation of fund outflows from heavyweights and inflows into mid-tier banks.

Indian Bank Shares Fall 2.5% After Missing Inclusion

Indian Bank, which was widely expected by several analysts to secure an entry into Bank Nifty, witnessed sharp selling pressure.
Its stock fell 2.5% to ₹865.65, reacting to the disappointment of being left out of the index reshuffle.

Market Impact and Outlook

The index changes typically lead to short-term volatility as traders adjust to flows and passive funds rebalance their portfolios.
The contrasting moves — gains in Yes Bank and Union Bank, and declines in larger private banks — reflected this repositioning.

With the rebalancing date approaching, market participants expect more activity in the banking pack, especially in high-liquidity names.