Nifty entry: Zomato, Jio Financial shares to attract $910 million inflows, push index PE higher

Zomato Ltd and Jio Financial Services Ltd will enter Nifty this week and are expected to attract over $900 million in passive inflows. The two stocks may also increase a widely tracked valuation multiple for the 50-pack index, as they replace existing index constituents Britannia Industries and BPCL.

The entry of the two stocks are seen pushing Nifty's estimated FY26 EPS lower to Rs 1,171 from Rs 1,186, resulting in a rise in Nifty PE ratio to 20.2 times from 19.9 earlier, Nuvama Institutional Equities suggested.

On FY27 basis, Nifty EPS is expected to fall to Rs 1,335 from Rs 1,349, with PE rising to 17.7 times from 17.5 times at present, as the two stocks replace Britannia Industries Ltd and BPCL from the index.

Zomato is expected to see buying of $245.3 million shares worth $602 million due to Nifty inclusion. JFS may attract $308 million worth of passive buying. Britannia Industries and BPCL are expected to see outflows of $238 million and $225 million, respectively.

The adjustments will take place on March 27 and the stocks would be included in Nifty on March 28.

The entry would also result in passive outflows from Bajaj Finance Ltd ($79 million), HDFC Bank ($51 million), Reliance Industries ($1 million), ICICI Bank ($35 million) and Infosys ($24 million) on cut in weightages. Grasim Industries, Adani Enterprises, UltraTech Cement and Cipla may gain but insignificantly.

In one takes into account the combined impact of rejig in Nifty, Nifty Next 50, Nifty Bank, Nifty CPSE, Nifty Midcap 150 and Nifty Midcap 250, top inflows would be seen in Zomato ($391 million), JFS ($200 million), Indian Hotels ($85 million), Power Grid ($49 million) & CG Power ($47 million).

Top outflows in this case would include Britannia ($153 million), BPCL ($145 million), Bajaj Finance ($79 million), KOtak Mahindra Bank ($78 million) and NTPC ($72 million).

In the Nifty Bank, Federal Bank is expected to experience a net inflow upwards of $17 million, while Kotak Bank may witness an outflow to the tune of $67 million, Nuvama said.

In the CPSE index, Power Grid is expected to experience a net inflow upwards of $54 million, while key outflows are seen in NTPC ($66 million).