'Most ridiculous': Sandip Sabharwal questions Zomato & Jio Financial's inclusion in Nifty50

The National Stock Exchange (NSE) has announced a major reshuffle in its benchmark indices, bringing Jio Financial Services and Zomato into the Nifty50, replacing Britannia Industries and BPCL. The move, set to take effect on March 28, has drawn sharp criticism from some market experts.

Sandip Sabharwal voiced strong opposition, calling the inclusion of Zomato and Jio Financial “ridiculous.” In a post on X, he argued that both companies lack a meaningful track record as listed entities. 

"Both barely have any trading history and Jio Financial barely has any business to talk of," he said.

He further warned that this decision could artificially inflate Nifty’s PE ratio, as one company is loss-making while the other has no established business. "There needs to be an established track record as a listed company for coming into premier indices," he added.

Beyond the Nifty50 shake-up, NSE has announced changes across multiple indices. Nifty Next50 will see seven new stocks, including Bajaj Housing, BPCL, Britannia, CG Power, Hyundai Motor India, Indian Hotels, and Swiggy, replacing Adani Total Gas, BHEL, IRCTC, Jio Financial, NHPC, Union Bank, and Zomato.

The Nifty 100 index will add Swiggy, Hyundai Motor India, Bajaj Housing Finance, Indian Hotels, and CG Power, while Adani Total Gas, BHEL, IRCTC, NHPC, and Union Bank exit. The Nifty 500 will undergo 30 inclusions and 29 exclusions, while Nifty Midcap150 and Nifty Smallcap250 will also see multiple replacements.

What next for market?

Sabharwal, in an interview with ET Now, observed that while small and midcap stocks have stopped falling, it remains uncertain whether this is a short-term bounce or the beginning of a deeper correction. He likened it to a "tennis ball falling from a rooftop," suggesting that further downside is possible despite the recent stability. On the macro front, he pointed to a peaking US dollar index, which could trigger a reversal of capital flows into emerging markets. Countries like Korea and Brazil have already surged ahead, while India has lagged behind. However, he believes foreign inflows could soon boost Indian equities as part of the broader emerging market trend.

In terms of investment strategy, Sabharwal is fully invested, seeing value in capital goods, infrastructure, and select NBFCs. He specifically mentioned NCC and Ahluwalia Contracts in infrastructure, Jyothy Labs in the consumer sector, and Mahindra Financial and L&T Finance among NBFCs as attractive bets. With the Nifty reshuffle coming into effect next month, investors and analysts will be closely watching how these changes impact market dynamics.