Adani Enterprises could enter the Nifty 50 index in the next semi-annual index review (SAIR) according to Abhilash Pagaria — Head,  Edelweiss Alternative & Quantitative Research. “In the upcoming Nifty September Review, according to our preliminary analysis for Nifty 50 we believe Adani Enterprises holds a high chance to dislodge Shree Cements. The only risk factor is that any sharp contra price move in either of the probable names can lead to a change in conviction,” Pagaria said. The rebalancing of NSE indices will be announced in August and come into effect from September end. 

Nifty inclusion and possible fund inflows

If Adani Enterprises is included in the benchmark Nifty 50 index, Edelweiss has predicted $183 million in inflows. Meanwhile, the exclusion of Shree Cements may result in outflows worth $94 million. So far this year, Adani Enterprises’ share price has zoomed 29% to now trade at Rs 2,231 per share. Shree Cements’ stock price is down a little over 18% during the same period.

A key criterion for stocks to be added to the 50-stock index is their inclusion in the derivatives segment. “For instance, the average free-float market cap of Avenue Supermarts, Adani Green Energy, and Adani Transmission is significantly higher than most of the existing Nifty 50 constituents, but the stock has not been included in the index for the past few reviews as they are not a part of the F&O segment,” the report said. If any of the above-mentioned stocks are added to the derivative segment till the cut-off date which is July 29, then these could enter Nifty 50. 

LIC may soon be added to Nifty Junior?

Edelweiss is also anticipating the entry of the newly listed Life Insurance Corporation of India (LIC) into the Nifty Next 50 index. Other possible candidates for inclusion include Tata Power, Adani Wilmer, IRCTC Ltd, and Shree Cements. Mphasis and Motherson Sumi Systems are borderline candidates. On the other hand, Lupin, Jubilant Foodworks, Zydus Lifesciences, PNB, and SAIL could exit the index. Adani Enterprises would also be excluded if it is added to Nifty 50 instead. 

Sectoral indices

Among sectoral indices, some changes are anticipated for the Nifty IT index. Persistent Systems may enter the index, bringing on $20 million in inflows. The stock would replace L&T Technology Services. Bank Nifty is expected to maintain its current composition.  “Looks like Status quo (for Bank Nifty). None of the stocks qualifies yet, but any significant O/P by Canara Bank or U/P by PNB of 15% till mid of June, which if sustained till July end can lead to changes,” Edelweiss noted.