• Wed. Feb 21st, 2024

Another setback for Zomato, Nike? Nifty is likely to be removed from the next 50 index

Another setback for Zomato, Nike?  Nifty is likely to be removed from the next 50 index

In another bad news for the shareholders of Zomato and Nykaa, eleven non-futures and options (Non-F&O) stocks, including these two, are likely to be removed from the Nifty Next 50 index.

NSE Indices, which owns and manages a portfolio of indices under the Nifty brand, in a discussion paper has proposed to retain only stocks traded in the F&O segment in the Nifty Next 50 index, Business Standard reported.

If NSE Indices decides to go ahead with the proposal, stocks like LIC, P&G, Demart, Varun Beverages and Adani Green Energy will also cease to be part of the index. Stocks will be removed from the index in two phases.

Nuwama Institutional Equities said this is only a proposal now and final implementation will be announced by the third week of June.

Nuwama added that Shreeram Finance, AU Small Finance Bank, Trent and Indian Hotels entering the index following the exit of non-F&O stocks could see inflows of $40 million.

“The index’s exposure to non-F&O stocks, frequently hitting price bands, reduces its ability to efficiently replicate the index portfolio and thus increases tracking error” Said Abhilash Pagaria, Head of Nuwama Alternative & Quantitative Research.

Removal from the Nifty Next 50 index will lead to capital outflows from Zomato and Nykaa, which have been hit hard by the global economic slowdown and the collapse of tech companies over the past year or so.

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Speaking on the matter, Ambarish Baliga, an independent research analyst said, “Funds that benchmark their portfolio against the Nifty Next 50 may lighten their position in these stocks; So, we could see some selling pressure.

While these 11 stocks are likely to witness some negative impact, the exclusion of non-F&O stocks will have a positive impact on the index as a whole, believes Sarvjeet Virk, co-founder and MD, trading platform Shumhana. Various index hedging strategies and pair trading.

Zomato and Nykaa are worth noting It was an unforgettable 2022. Nykaa’s share price fell 56% During the year (adjusted to lower denomination post bonus share issue), Zomato A 57% A fall in its share price.

While stocks have gained some strength of late, they still see extreme volatility. In April, shares of Nykaa Touched the bottom of them 114.25 on NSE. Currently, its shares are trading 18% higher at Rs 135.

On the other hand, Zomato shares have rallied nearly 39% in the past two months, reversing the downward trend in the first three months of the year, which saw it fall over 14% on the NSE.

Shares of Zomato ended trading today The session rose 1.5% to INR 72.36 On BSE, Nykaa’s has ended 2.9% down to INR 133.8.

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