Apollo Hospital, Info Edge in Nifty 50 race, Indian Oil might make an exit

However, if IOC shares rally 10-15% from current levels over next few weeks and Apollo or Info Edge fall or remain unchanged, there could be a status quo

Apollo Hospitals Enterprise and Info Edge (India) are in the race to get added to the premier Nifty 50 index. Meanwhile, state-owned Indian Oil Corporation (IOC) is seen as exiting the index, as per calculations made by Edelweiss Alternative Research.

To be sure, these are early predictions as the cut-off date for calculating changes to the Nifty indices ends on January 31, 2022. The semi-annual rejig takes place on March 31, 2022 and the changes are formally announced during the second half of February.

"As per our calculations using the four months of existing free float market cap and assumption of future seven weeks market cap (average market cap of last 10 days assumed), we believe that Apollo Hospitals holds a slightly higher chance than Info Edge. Currently, both the stocks are 1.5 times above Indian Oil’s free float market cap,” said Abhilash Pagaria, Head-Alternative & Quantitative Research, Edelweiss Securities in a note.

"If IOC shares rally 10-15 per cent from current levels over the next few weeks and those of Apollo Hospital or Info Edge fall or remain unchanged, there could be a status quo," said Pagaria.

There are 4-5 parameters laid down for Nifty inclusion. One of them is that the incoming stock needs to have at least 1.5 times the free-float market cap of an outgoing stock. Besides, for a stock to be included in the Nifty index, it should be available for trading in the futures and options (F&O) segment.

Avenue Supermart (Dmart), which is among India’s 15 most valuable firms, meets most criteria. However, the stock isn’t eligible as it is not part of the F&O segment.

NSE announced the inclusion of close to a dozen stocks to the F&O segment over the past few weeks. However, Dmart’s name was conspicuous by its absence.

Meanwhile, Pagaria predicts public sector enterprise Bank of Baroda to dislodge RBL Bank in the Bank Nifty index. And Persistent Systems could replace L&T Technology in the Nifty IT Index.

A host of changes are likely to the Nifty Next 50 Index, inclusion into it is seen as a stepping stone to the Nifty 50 index.

Mindtree, Zomato, SRF and IRCTC are seen as getting added to the index, while Yes Bank, Indraprastha Gas (IGL), Jindal Steel and Hindustan Petroleum Corporation (HPCL) could be on their way out.