Zomato, Jio Fin, Britannia, And BPCL Stocks Dip After NSE Rejig Announcement

Shares of Zomato and Jio Financial Services, which are set to join the National Stock Exchange (NSE) Nifty50 from March 28, 2025, traded lower on Monday, February 24, 2025. The NSE had announced these changes through a circular issued last Friday, as part of its periodic index rebalancing.

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Changes in the Nifty50 Index

According to the notification, Zomato and Jio Financial Services will replace Bharat Petroleum Corporation (BPCL) and Britannia Industries in the 50-share benchmark index.

"The Index Maintenance Sub-Committee (Equity) of NSE Indices Limited has decided to make replacements in various indices as part of its periodic review. These adjustments will take effect from March 28, 2025 (post-market closure on March 27, 2025)," stated the NSE circular.

As of 9:25 AM, stock movements on NSE were as follows:

• Zomato fell 2.46%, reflecting investor caution following the announcement.
• Jio Financial Services declined 0.81%, as market participants adjusted their positions in anticipation of the upcoming changes.
• Britannia Industries, set to be removed from the index, dropped 0.66%.
• BPCL, also facing exclusion, slipped 0.16%.
   

Meanwhile, the NSE Nifty50 itself was down 0.71%, trading at 22,633.45, indicating broader market weakness.

Expected Impact on Stock Movements

The semi-annual review conducted by NSE Indices typically results in significant fund flows due to the portfolio realignments of passive investment funds tracking the Nifty50. Analysts estimate that the removal of BPCL and Britannia from the Nifty50 could lead to selling pressure of over ₹2,000 crore per stock as index-linked funds adjust their holdings.

On the other hand, the inclusion of Jio Financial Services and Zomato in the Nifty50 is expected to attract buying inflows of around ₹3,128 crore and ₹6,525 crore, respectively. However, analysts point out that net inflows could be slightly lower due to passive fund liquidations following their removal from the Nifty Next 50 index.

Nifty Next 50 Index Adjustments

Besides changes in the Nifty50, the Nifty Next 50 index is also undergoing reshuffling. Stocks set to be included in this index traded mixed around 9:25 AM:

• Bajaj Housing Finance declined 0.61%.
• C G Power saw a sharper drop of 2.51%.
• Swiggy, a recent entrant into the public market, was down 1.83%.
• Hyundai Motor, in contrast, gained 0.51%, possibly benefiting from renewed investor interest.
   

These additions are projected to bring in passive fund inflows ranging from ₹100 crore to ₹950 crore, as per estimates by IIFL Institutional Equities.

Conversely, stocks that are set to be excluded from the Nifty Next 50 index faced selling pressure:

• Adani Total Gas dropped 0.99%.
• Bharat Heavy Electricals (BHEL) declined 1.88%.
• IRCTC fell 1.42%, likely due to outflows from index-tracking funds.
• NHPC slipped 2.05%.
• Union Bank of India was down 0.49%.
   

These stocks are estimated to face ₹300 crore in selling pressure each, as investors adjust their portfolios in response to the index changes.

Market Trends and Investor Sentiment

Market experts believe that stocks being added to key indices may see short-term gains leading up to the rebalancing, as passive funds and institutional investors adjust their portfolios accordingly. Historically, stocks included in major indices tend to witness increased trading volumes and price appreciation before the changes take effect.

However, recent market corrections and global economic uncertainties have kept investors cautious. Concerns over inflation, geopolitical tensions, and interest rate policies continue to impact market sentiment. Analysts recommend a selective approach, suggesting that while Jio Financial Services and Zomato may benefit from index inclusion, broader market trends will play a crucial role in determining their performance.

Additionally, BPCL and Britannia Industries may face temporary weakness following their exclusion, but long-term investors could see this as a buying opportunity, especially if fundamentals remain strong.

The NSE’s semi-annual index reshuffling is expected to drive significant fund flows in the coming weeks, influencing stock prices of the affected companies. While Zomato and Jio Financial Services are poised to attract substantial passive inflows, BPCL and Britannia may face selling pressure. Similarly, Nifty Next 50 adjustments will impact various stocks, leading to a shift in market dynamics.

Investors are advised to monitor these developments closely and consider long-term fundamentals alongside short-term technical factors when making investment decisions. As the March 28, 2025 rebalancing date approaches, volatility in the affected stocks is likely to increase, creating both risks and opportunities for traders and investors alike.