Index Rejig: 2 stocks to replace BPCL, Britannia in Nifty 50

In a major index reshuffle, stock exchange NSE on Friday announced the inclusion of two stocks in its headline Nifty 50 index. The two stocks to enter the 50-scrip benchmark are Zomato Ltd and Jio Financial Services.

The two stocks will be replacing Bharat Petroleum Corporation Ltd (BPCL) and Britannia Industries.

The changes, part of a much-anticipated semi-annual rejig, will come into force with effect from March 28.

Zomato & Jio Financial Services to enter Nifty 50 | What is an index reshuffle? How does it impact securities?

Also known as index rebalancing, an index reshuffle is a periodic review of a stock market index's components.

This rebalancing process involves the inclusion and/or exclusion of scrips from the index to ensure it continues to be in alignment with its underlying methodology.

Typically, the inclusion of a stock in an index leads to inflows for the stock owing to larger visibility and exposure to institutional players such as banks and mutual funds. On the other hand, the exclusion of a stock from an index may lead to a fall in its price owing to decreased demand. 

Does index rebalancing always impact fund flows?

An index rejig does not always lead to more inflows or outflows. 

This is because the impact of an index reshuffle on fund flows depends on a combination of one or more factors, such as market sentiment, stock fundamentals and index methodology.

While an index reshuffle can influence fund flows, it is not a guaranteed outcome.