Divi's, SBI Life to see combined inflows of Rs 1,400 cr on Nifty inclusion

Over Rs 650-cr selling in Zee, Infratel

Divi’s Laboratories and SBI Life will see combined inflows of nearly Rs 1,400 crore on account of their inclusion in the widely-tracked Nifty 50 index. Meanwhile, outgoing candidates Zee Entertainment Enterprises and Bharti Infratel will see outflows of Rs 650 crore in total.

As part of its semi-annual index review, NSE on Thursday announced these changes to the Nifty 50 index, which is estimated to be used as an underlying by exchange traded funds (ETFs) with assets of nearly Rs 90,000 crore.

The changes will take effect from September 25, a day after expiry of the next month’s derivatives contract.

Edelweiss analysts Sriram Velayudhan and Abhilash Pagaria in a note said Divi’s will have a weightage of 0.83 per cent and SBI Life 0.69 per cent. Currently, Zee and Infratel have weightage of about 0.37 per cent each.

Divi’s has made it to the index on the back of strong gains this year. From this year’s lows, the stock has surged 80 per cent to Rs 3,238.

Some players criticised the move to include the stock. “Including the stock after such as sharp rally, will force funds to buy the stock at higher values. This will further increase valuations both for the stock as well as the index,” said an analyst.

Often in the past, it has been seen that a stock gets added to an index after the best gets played out in terms of stock market gains.

This on account of the index inclusion criteria which gives importance to factors such as market capitalisation of the stock.

SBI Life will join HDFC Life in becoming only the second insurance company to get added to the index.

Last month, HDFC Life had replaced Vedanta in the Nifty 50 index. This was however, an out-of-turn reshuffle following delisting bid by Vedanta.

Shares of SBI have gained 62 per cent from their lows in March. In comparison, the Nifty is up 50 per cent.