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In its semi-annual review of indices, the NSE announced last week about the change in constituents of three indices – Nifty 50, Nifty Financial Services and Nifty Midcap Select Index. While only one stock is being changed in the constituents in the first two, there are four changes in Nifty Midcap Select. These changes will be effective March 28. The changes will be made based on the six-month average free-flow market capitalisation.
Nifty 50: The company that will be excluded from the benchmark index is UPL, as it has seen a significant drop in price, which has led to a decline in market capitalisation. This will be replaced by Shriram Finance, which has appreciated over the past year.
Nifty Financial Services: The stock of Indian Energy Exchange (IEX) will be removed from this index and will be replaced by IDFC Ltd as the market capitalisation of the latter has surpassed that of the former.
Nifty Midcap Select: Four stocks are being replaced here. The scrips that are going out are Abbott India, Balkrishna Industries, Bandhan Bank and Power Finance Corporation. These companies will be replaced by Lupin, PI Industries, UPL and Vodafone Idea.
The stocks that are going to be included in the indices will get an inflow, whereas the ones that are excluded will see an outflow. This is because the index following funds will make necessary adjustments in their holdings. Thus, there could be an impact in prices of the stocks mentioned above as they witness the churn.
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