Brokerage firm Nuvama Institutional Equities suggests that Canara Bank is expected to be added to the Bank Nifty index during the September reshuffle.
Additionally, the brokerage firm indicates that Trent Limited, a retail company under the Tata Group, and Bharat Electronics Limited, a state-owned defense manufacturer, are potential new additions to the Nifty 50 index. They may replace LTIMindtree and Divi’s Laboratories in the September adjustment.
Trent Limited's shares have jumped 89 per cent year-to-date, significantly outperforming the Sensex, which has risen 9 per cent over the same period. Bharat Electronics Limited has also seen a notable increase, with its stock up 62 per cent during this time.
The average market capitalization up to the end of July will be used as the cut-off point, with an official announcement anticipated in the latter part of August. The adjustments will be implemented on September 30.
“We firmly believe that Trent Limited and Bharat Electronics Limited will displace LTIMindtree Limited and Divi’s Laboratories Limited in the Nifty 50. These potential changes would lead to an inflow of approximately USD 500 million into Trent Limited and USD 440 million into Bharat Electronics Limited,” said Abhilash Pagaria, Head of Nuvama Alternative & Quantitative.
Nuvama anticipates that Canara Bank will replace Bandhan Bank in the Nifty Bank index.
Brokerage firm says that the following companies will be added to the Nifty Next 50 index: JSW Steel Limited, NHPC Limited, Union Bank of India, Hindustan Zinc Limited, and Indian Overseas Bank. Conversely, the firm expects the following companies to be removed: Colgate-Palmolive (India) Limited, SRF Limited, Mangalore Refinery and Petrochemicals Limited, SBI Cards and Payment Services Limited, and Berger Paints India Limited.
"Conversely, the exclusions of LTIMindtree Limited and Divi’s Laboratories Limited will result in outflows of approximately $210 million and $260 million, respectively," he added.
The composition of the Nifty 50 is subject to change, with potential additions including Divi’s Laboratories Limited, LTIMindtree Limited, and Bharat Petroleum Corporation Limited. Conversely, there could be removals of Zomato, Jio Financial Services Limited, Trent Limited, and Bharat Electronics Limited.
As a caution, Nuvama points out that if SEBI grants approval for the inclusion of Zomato Limited and Jio Financial Services Limited in the F&O segment before the NSE Indices' August announcement, these stocks will have a greater likelihood of being added to the Nifty Index. Should this occur, the additions would be Zomato Limited, Jio Financial Services Limited, and Trent Limited, while the removals would include LTIMindtree Limited, Divi’s Laboratories Limited, and Bharat Petroleum Corporation Limited.
