3 PSU bank stocks may find hot seats in Nifty Bank, Junior Nifty

As PSUs remain the buzzword on Dalal Street, Canara Bank looks set to dislodge Bandhan Bank from Nifty Bank with effect from next month. Two other PSU bank stocks - Union Bank and Indian Overseas Bank - may find coveted seats in Nifty Next 50, also known as Junior Nifty, according to an analysis by Nuvama Alternative & Quantitative Research.

In case of Nifty50, Trent and Bharat Electronics are seen replacing LTI Mindtree and Divi’s Lab.

If Canara Bank shares are included in the banking index, the announcement of which is expected later on in the month from NSE Indices, it could lead to passive inflows worth about $45 million in the PSU bank stock.


Nuvama believes that Nifty Next50 will see the inclusion of JSW Energy, NHPC, Union Bank, Hindustan Zinc and Indian Overseas Bank while Colgate-Palmolive, SRF, Marico, SBI Card and Berger Paints may get thrown out.

For the calculation, Nifty Indices will consider the average market cap cut-off until the end of July. An official announcement will occur in the latter half of August, with the adjustment taking place on September 30.

However, if Sebi approves F&O inclusion for Zomato and Jio Financial Services before announcement by NSE Indices in August, they will have a higher chance to make it to Nifty than both Trent and BEL, Nuvama's Abhilash Pagaria said.

Earlier in March-end, Shriram Finance had replaced UPL in Nifty's reshuffle. The index has 50 stocks which are selected based on a free-float market capitalisation weighted method, wherein the level of the index reflects the free float market capitalisation of all stocks in the barometer.