Britannia, JSW Steel likely to be included in Nifty soon

Mumbai: Biscuit maker Britannia Industries and steel products manufacturer JSW Steel are likely to enter the benchmark Nifty index in place of Hindustan Petroleum Corporation and Lupin in the upcoming index rebalancing, analysts said.

The exchange may come out with its list of inclusions and exclusions in the latter half of August and these stocks may be included in the Nifty from the October series, said ICICIdirect in a note.

As per the guidelines, a stock may be replaced in an index in case of compulsory changes like corporate actions and delisting. The stock having largest free float market capitalisation and satisfying other requirements related to liquidity, turnover and free float will be considered for inclusion in this scenario.


A change is also made when there is a better candidate for inclusion. The stock which is included in the index should have market capitalisation which is 1.5 times the market cap of the stock which is excluded.

“Britannia will have close to 0.5 per cent weightage on introduction in the Nifty. Britannia is most likely to replace HPCL as it exceeds HPCL’s current free float market cap by 1.5 times,” said Amit Gupta, head of derivatives at ICICIdirect. The retail brokerage said that either JSW or Godrej Consumer Products are likely to replace Lupin in the Nifty.

According to the guidelines, a maximum of 10 per cent of the index size may be changed in a calendar year, which means a maximum of five stocks can be replaced among the 50 stocks. As three changes have already been made in the last rebalancing, only two changes are expected in the upcoming rebalancing.

“JSW Steel and Britannia are likely to be added in the Nifty index. Exit is likely for HPCL as its free float market cap has come down,” said Chandan Taparia, derivative analyst at Motilal Oswal. “Sentimental buying can come in as funds which use index as benchmark will come in,” said Taparia.

There is also a chance that Lupin may not be excluded from the index given the recent spurt in pharmaceutical sector stocks.

The Nifty Pharma index has risen 17.8 per cent from its 52-week low of 7,900.35 was hit on May 23.

Lupin has gained 26 per cent from its 52-week low of Rs 723.65 hit on May 15.