JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing

JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing
JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing/Mint
JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing
JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing/Mint

JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing

JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing

JM Financial anticipates Trent, BEL to join Nifty50 in August indices rebalancing

Domestic 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 NSE indices rebalancing announcement is scheduled for August, and the changes will take effect on September 30, 2024.

JM Financial expects Trent Ltd and Bharat Electronics Ltd (BEL) to 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.

NSE Indices rebalancing announcement is scheduled in the month of August, effective from September 30.

The brokerage firm said in its report, “For the September rebalancing, the index provider assumes an average free float market cap between the period February 1 to July 31. Based on the average free float market cap till now, we expect the following changes in the Nifty Inclusions – Trent (TRENT) and Bharat Electronics (BHE)

Exclusions – LT Mindtree (LTIM) and Divis Laboratories (DIVI)”

However, LTIMindTree Ltd and Divis Laboratories Ltd (Divis Labs) are expected to 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, their exclusion from the F&O segment prevents their inclusion in the Nifty50 index, as cash market counters cannot become index constituents.

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“It is interesting to note that JOFIN and ZOMATO have an average free float market cap higher than TRENT and BHE. However, they are not likely to be included in the Nifty as they are not a part of the F&O segment.

Any inclusion of them in the F&O segment would lead to their inclusion in the Nifty. Under such a scenario, we expect following changes: Inclusions – JO Financial Services (JIOFIN), Zomato (ZOMATO) and Trent (TRENT) 

Exclusions – LTI Mindtree (LTIM), Divis Laboratories (DIVI) and Eicher Motors (EIM),” the firm added.

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