Zomato and Jio Financial Shares Rise Ahead of Nifty 50 Inclusion
Shares of Zomato and Jio Financial Services experienced significant gains during early trading hours on Thursday, ahead of their scheduled inclusion in the benchmark Nifty 50 index. On the Bombay Stock Exchange (BSE), Zomato’s share price surged as much as 2.68% to ₹208.75, while Jio Financial Services rose by 1.95% to ₹226.75. By 10:00 AM, Zomato shares were trading at ₹205.00, up 0.84%, and Jio Financial Services at ₹225.20, marking a gain of 1.26%.
Nifty 50 Index Rebalancing
The inclusion of these two stocks in the Nifty 50 index is part of the scheduled March 2025 semi-annual index rebalancing, effective from March 28. This adjustment will see Zomato replace Bharat Petroleum Corporation Limited (BPCL), a state-run energy giant, while Jio Financial Services, a subsidiary of Reliance Industries, will take the place of FMCG major Britannia Industries.
This strategic reshuffling reflects the changing composition of India’s premier stock market index, showcasing the growing importance and investor confidence in technology-driven enterprises and financial service providers.
Expected Passive Fund Inflows
The entry of Zomato and Jio Financial Services into the Nifty 50 is expected to generate substantial passive fund inflows. According to financial analysts, Zomato alone is projected to attract approximately $602 million in inflows, whereas Jio Financial Services is estimated to see inflows of around $308 million. Collectively, this amounts to over $900 million in passive investments, underscoring the financial impact and investor confidence generated by their inclusion in the index.
Conversely, the exclusion of BPCL and Britannia Industries is anticipated to cause passive fund outflows. BPCL is expected to witness outflows of approximately $225 million, and Britannia Industries around $238 million.
Recent Stock Performance
Despite the positive investor sentiment due to their upcoming index inclusion, both stocks have faced challenges in recent months. Zomato’s shares have fallen approximately 11% in the last month and are down 26% on a year-to-date (YTD) basis. Jio Financial Services, while experiencing moderate monthly growth of about 1%, has also declined around 26% YTD.
The current rise in their share prices can be seen as investors positioning themselves ahead of the expected passive inflows following their entry into the benchmark index.
Impact on Nifty 50 Valuation
Analysts predict that the inclusion of these new-age, digital-focused companies will impact the overall valuation of the Nifty 50 index. The price-to-earnings (P/E) ratio of the index, currently around 19.9x based on an estimated earnings per share (EPS) of ₹1,186 for FY26, is expected to increase to approximately 20.2x. This revised valuation reflects the higher market multiples typically associated with technology and digitally-driven enterprises like Zomato and Jio Financial Services.
Strategic Importance for the Market
The move to include Zomato and Jio Financial Services in India’s leading stock index signals a strategic shift towards recognizing the growing importance of technology and digital service companies in India’s economy. As India’s digital economy continues to expand, reflecting similar global trends, major indices such as Nifty 50 increasingly incorporate firms representative of this new economic landscape.
Conclusion
The inclusion of Zomato and Jio Financial Services in the Nifty 50 index represents a significant milestone in India’s stock market, highlighting the evolving economic and investment landscape. This change not only boosts investor confidence in the featured companies but also reshapes the market dynamics and valuation approaches for India’s benchmark index. Market participants will closely monitor these companies’ performance post-inclusion, which could set precedents for future index composition strategies.
