The exclusion of Jio Financial Services (JFS) from the Nifty index, effective from Thursday, is expected to lead to passive inflows for Nifty heavyweights such as HDFC Bank, Reliance Industries (RIL), ICICI Bank, Infosys (NS: INFY ), and ITC among others.
This shift is due to increased index weightage following the removal of JFS, as projected by Abhilash Pagaria of Nuvama Alternative & Quantitative Research on Wednesday.
Jio Financial could see passive outflows amounting to $324 million due to its exclusion. In contrast, HDFC Bank may experience inflows amounting to $44 million. The overall impact of JFS's exclusion is predicted to be neutral, as it would be evenly distributed among 50 Nifty stocks based on free-float.
According to estimates by Nuvama, RIL could see $31 million inflows, followed by ICICI Bank ($26 million), Infosys ($20 million), ITC ($15 million), and TCS ($13 million). Larsen & Toubro and Axis Bank are also expected to receive inflows in excess of $10 million.
On Wednesday, JFS shares were trading 2.6% lower at Rs 248.40 ($1 = INR83.124) on the National Stock Exchange (NSE). The stock did not hit the price band on two consecutive trading days which led the index maintenance sub-committee of NSE indices to decide on its removal from various indices. This decision follows a similar one taken earlier when JFS was excluded from Sensex and other BSE indices from September 1.
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