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JM Financial anticipates Trent and BEL to join Nifty50 in August index rebalancing
National brokerage firm JM Financial said in a new report that it is anticipating that two stocks will be added to the Nifty50 index while two others will be removed in the coming weeks. The announcement of the rebalancing of NSE indices is expected in August, and the changes will come into effect on September 30, 2024.
JM Financeiro waits Trent Ltd and Bharat Electronics Ltd (BEL) will join the Nifty50 index in this rebalancing exercise. If included, Trent Ltd and BEL could see expected inflows of $412 million and $392 million respectively.
The announcement of rebalancing of NSE indices is scheduled for the month of August, effective from September 30th.
The brokerage said in its report: “For the September rebalancing, the index provider assumes a free-float average market capitalization between the period February 1 to July 31. Based on the free-float average market capitalization through Now, we expect the following changes in the cool inclusions – Trent (TRENT) and Bharat Electronics (BHE)
Exclusions – LT Mindtree (LTIM) and Divis Laboratories (DIVI)”
However, LTIMindTree Ltd and Divis Laboratories Ltd (Divis Labs) should be replaced in the next rebalancing. According to a note from JM Financial, this replacement will likely result in outflows of $180 million and $224 million, respectively. The index provider will consider the average free float market capitalization between February 1 and July 31 for the September rebalancing.
The brokerage also noted that Jio Financial Services Ltd (Jio Fin) and Zomato Ltd have a higher average free-float than Trent and BEL. However, its exclusion from the F&O segment precludes its inclusion in the Nifty50 index as cash market counters cannot become constituents of the index.
“It is interesting to note that JOFIN and ZOMATO have a higher average free float market capitalization than TRENT and BHE. However, they are not likely to be included in Nifty as they are not part of the F&O segment.
Any inclusion of them in the F&O segment would lead to their inclusion in Nifty. In this scenario, we expect the following changes: Additions – JO Financial Services (JIOFIN), Zomato (ZOMATO) and Trent (TRENT)
Exclusions – LTI Mindtree (LTIM), Divis Laboratories (DIVI) and Eicher Motors (EIM),” the company added.
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