Radhakishan Damani’s DMart is also expected to make the cut in Nifty’s rebalance, but does not meet the requirements to not be a derivative. (Image: owl
Shares of Avenue Supermart (DMart) of Radhakishan Damani and Naukri.com’s parent company Info Edge could be included in the NSE Nifty 50 benchmark in the next half-yearly index rebalance, according to the company brokerage Edelweiss. For the semi-annual index review, rebalance candidates are chosen on the basis of their average market capitalization over the previous six months among a host of other factors. The brokerage firm warned, however, that at this point there are no confirmed inclusions or exclusions from the index, as the two possible candidates for inclusion still have certain endorsements lined up with them.
Info Edge meets most of the inclusion criteria, but does not meet certain parameters. Edelweiss Securities pointed out that the index is slightly below the requirement of 1.5 times the average free float market capitalization of the smallest component of the index. “The average free float market capitalization of meters as of June 17 is 1.45 times that of Indian Oil Corp. The trading days until July 30 will be crucial in moving the needle, ”Edelweiss said in a report.
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Info Edge’s stock price has only gained 3% in the past six months, with volatile trading along the way. The share is currently trading at Rs 4,810 per share. Info Edge has an Edelweiss Hold rating due to high valuations.
Radhakishan Damani’s DMart is also expected to make the cut in Nifty’s rebalance, but does not meet the requirements to not be a derivative. “Interestingly, stocks have been qualifying for derivative inclusion for the past two quarters, but the final call for F&O inclusion is at the discretion of SEBI and, as with all past inclusions, it is. very subjective, ”says the report. They added that if DMart is included in F&O before the end of August, the stock can also be added to Nifty 50. The DMart share price has climbed 26% in the past six months to trade. now at Rs 3,353 per share.
For one of these two stocks to be included in the Nifty 50, Edelweiss considers India Oil Corporation as the most likely exclusion.
Possible fund flows
The report adds that the inclusion of Info Edge in the Nifty 50 index will result in a 55 basis point weighting resulting in entries worth $ 110 million. Meanwhile, if DMart is added to the index, it will see a weighting of around 72 basis points, resulting in entries worth $ 140 million.
Excluding Indian Oil would result in a weight reduction of 43 basis points, resulting in an outflow of $ 82 million.
Nifty Bank rebalancing
Edelweiss believes that there are no stocks that can be included in the Bank Nifty index. “Only Yes Bank meets most of the criteria, but it is a non-M&O component and according to our analysis (with the current dataset), the action is not eligible to be introduced into the products. derivatives, ”they added.
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