Canara Bank set to replace Bandhan Bank in Bank Nifty; Trent and BEL to join Nifty in Sept rejig

Trent Ltd shares have surged 89 percent year to date compared to a 9 percent gain in the Sensex.

PSU banking major Canara Bank is likely to be included in the Bank Nifty index in the September reshuffle, according to Nuvama Institutional Equities.

Tata Group's retail firm Trent Limited and state-owned defence giant Bharat Electronics Limited are also potential entrants to the Nifty 50 index in the September adjustment while replacing LTIMindtree and Divi’s Laboratories, as per the broking house.

Trent Limited shares have surged 89% year to date compared to a 9% gain in the Sensex, while Bharat Electronics Limited has rallied 62% during the same period.

The average market-cap until the end of July will be considered as the cut-off, with the official announcement expected in the latter half of August. The adjustments will take place 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.

"Conversely, the exclusions of LTIMindtree Limited and Divi’s Laboratories Limited will result in outflows of approximately USD 210 million and USD 260 million, respectively," he added.

Inclusions and Exclusions in Nifty Bank and Nifty Next 50

For Nifty Bank, Nuvama expects Canara Bank to displace Bandhan Bank.

Canara Bank is up 21 percent, while Bandhan Bank trades down 17 percent year to date.

For Nifty Next 50, Nuvama expects the following inclusions: JSW Steel Limited, NHPC Limited, Union Bank of India, Hindustan Zinc Limited, and Indian Overseas Bank. The expected exclusions are Colgate-Palmolive (India) Limited, SRF Limited, Mangalore Refinery and Petrochemicals Limited, SBI Cards and Payment Services Limited, and Berger Paints India Limited.

Also read: Option strategy of the day | Long build up in Cipla; Bull call spread suggested for upside
These inclusions and exclusions are subject to changes in the Nifty 50, with possible additions of Divi’s Laboratories Limited, LTIMindtree Limited, and Bharat Petroleum Corporation Limited, and potential removals of Zomato, Jio Financial Services Limited, Trent Limited, and Bharat Electronics Limited.

Potential Changes Based on SEBI Approval

As a caveat, Nuvama notes that if SEBI approves F&O inclusion for Zomato Limited and Jio Financial Services Limited before the NSE Indices' announcement in August, these stocks will have a higher chance of making it to the Nifty Index. In that case, the inclusions will be Zomato Limited, Jio Financial Services Limited, and Trent Limited, while the exclusions will be LTIMindtree Limited, Divi’s Laboratories Limited, and Bharat Petroleum Corporation Limited.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.