Max Healthcare, InterGlobe Aviation set to enter Nifty 50, inflows of $1 billion expected: Nuvama

The Nifty 50 index is reshuffled twice a year.

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The benchmark Nifty 50 is set to undergo its semi-annual rebalancing later today, September 29, with the changes effective September 30 onwards. Budget airline carrier InterGlobe Aviation and healthcare player Max Healthcare are set to join the index, while beleaguered private lender IndusInd Bank and auto firm Hero MotoCorp are slated to exit.

During the rejig, the top inflows will be seen in InterGlobe Aviation ($362 million), Max Healthcare ($340 million), SBI ($80 million), Siemens Energy India ($53 million), Solar Industries ($46 million), and top outflows in Hero MotoCorp ($284 million), IndusInd Bank ($205 million), ICICI Bank ($57 million), Reliance Industries ($52 million), and HDFC Bank ($52 million).

According to Nuvama Alternative & Quantitative Research, the Nifty 50 rebalancing will lead to cumulative inflows into the benchmark index of $1.07 billion, while the passive outflows will be roughly $747 million.

On the flows front, major inflows are expected in SBI ($99 million, 1.2x ADV), ITC ($38 million, 0.6x ADV), and Bajaj Finserv ($19 million, 0.7x ADV) as the weightage of these stocks in the index rises. At the same time, weight reductions are likely to drive outflows in HDFC Bank ($66 million, 0.4x ADV), Reliance ($52 million, 0.3x ADV), and ICICI Bank ($47 million, 0.3x ADV).

For the Nifty Next 50, new additions will include Solar Industries ($59 million), Siemens Energy India ($53 million), Mazagon Dock Shipbuilders ($38 million), and Hindustan Zinc ($34 million). The index will see exits of IndiGo ($184 million), Dabur India ($49 million), ICICI Prudential Life Insurance ($38 million), and Swiggy ($27 million).

How are stocks chosen to join the Nifty 50?

The NSE reviews the composition of the Nifty 50 twice a year, based on the average free-float market capitalisation of stocks during the six months ending January 31 and July 31. The changes take effect in March and September.

To decide the stocks that enter the Nifty 50 index, NSE looks at the average free-float market capitalisation for the six months. Free-float market cap refers to the market value of shares readily available for trading by the public, excluding promoters' holdings and other restricted shares.

Adjustments to the index typically trigger portfolio rebalancing by exchange-traded funds (ETFs) that track the Nifty 50, often leading to significant inflows or outflows for the affected stocks.

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