Nifty Indices Rejig In March: Here's What Nuvama Expects
Will LTIMindtree find its way into Nifty 50? Here's what Nuvama says.
The Nifty 50 indices rejig is slated for March, for which the index provider will officially announce the list in the second half of February next year.
There may not be any changes for the Nifty 50 review in March 2023, according to Nuvama Alternative & Quantitative Research’s preliminary analysis.
It does not expect LTIMindtree inclusion in Nifty. "This is the most asked question, and as per best understanding of existing methodology, do not expect LTI Mindtree (LTIM) to make it to the Nifty in the March 2023 review."
The key is to see who replaces HDFC Ltd., given the merger with HDFC Bank Ltd, it said. The HDFC and HDFC Bank merger is expected to be completed by Q1 FY24.
A few stocks currently on their radar are Pidilite Industries Ltd., LTIMindtree Ltd., Ambuja Cements Ltd. and Tata Power Co. However, it is too early to pinpoint who could make it to Nifty 50, it said.
Nifty Next 50 Index
According to Nuvama Alternative & Quantitative Research, Adani Power Ltd., Varun Beverages Ltd., ABB India Ltd., and Page Industries Ltd. could be probable inclusions.
There are "border-line chances" of one of the three stocks—Adani Wilmar Ltd., Trent Ltd. or TVS Motor Co.—entering the Nifty Next 50 Index, it said.
Nuvama expects Biocon Ltd., Gland Pharma Ltd., Mphasis Ltd., and Bandhan Bank Ltd. to be excluded, whereas Muthoot Finance Ltd. or Colgate-Palmolive India Ltd. are on the borderline to be excluded, it said.
Nuvama does not expect any rejig in the Nifty IT or Nifty Bank Index. However, a significant outperformance by Canara Bank or underperformance by Punjab National Bank of 20% till the end of December, if sustained till January-end, could lead to changes, it said.
The most important criteria for Nifty inclusion is that the stock should compulsorily be part of the derivatives segment, Nuvama said.
For instance, average free float market caps of Avenue Supermarts Ltd., Adani Green Energy Ltd. and Adani Transmission Ltd. are significantly higher than most of the existing Nifty 50 constituents, but the stocks have not been included in the index for the past few reviews as they are not a part of the F&O segment, it said.
"If any of the above stock gets included in derivatives by the announcement date, then it would make it to Nifty 50."
The analysis highlighted that Adani Power Ltd. was excluded from all the Nifty indices in the September rejig on account of proposed voluntary delisting. On Sept. 17, Adani Power intimated stock exchanges on withdrawing of the proposal to voluntarily delist. "Thus, we expect the stock to make a comeback to Nifty Indices," it said.
Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.