Avenue Supermarts, Info Edge in contention for inclusion in Nifty 50

Avenue Supermarts and Info Edge are seen as the frontrunners to get added to the benchmark Nifty 50 index during the semi-annual review slated for September. Indian Oil or Coal India or both could get booted out of the blue chip company index, which is tracked by funds with assets under management of nearly $20 billion.

Avenue Supermarts, the company that operates the DMart retail chain, meets the market capitalisation criteria. However, the stock is not part of the derivatives segment, another key criterion that is required to be met for index inclusion. Analysts see a strong chance of the stock getting added to the futures and options (F&O) segment ahead of the Nifty rejig.

Meanwhile, Info Edge is part of the F&O segment but is yet to reach the market cap cutoff required to dislodge Indian Oil.

“The lowest ranked current index constituent is Indian Oil Corp, while Coal India ranks 49th. The highest ranked non-index constituents are Avenue Supermarts, Adani Green Energy, Info Edge (, Adani Enterprises and ICICI Lombard. DMART and Adani Green have an average free float market cap that is greater than the threshold for inclusion in the Nifty. However, neither of these stocks are a part of the F&O segment. Info Edge is included in the F&O segment. However, the stock has an average free float market cap that is lower than the threshold for index inclusion, “said Brian Freitas, an analyst on independent research provider Smartkarma in note.

Shares of Info Edge rallied 8 per cent on Thursday amid reports that Policybazaar could soon file its offer document with market regulator Sebi. Market players said the shares have also rallied on the buzz that Zomato could soon get Sebi clearance to come out with an IPO. Info Edge holds 18 per cent stake in Zomato and 15 per cent in Policybazaar.

Analysts said if shares of Info Edge continue to do well, it will firm up its Nifty inclusion chances.

“The ratio of Info Edge’s average float market capitalization to Indian Oil of 1.43 times. It means on a time series weighted average basis, for qualification Info Edge has to outperform Indian Oil by 25 per cent until the cut-off date of July 30,” said Sriram Velayudhan, Vice President at IIFL Securities in a note on Wednesday.

After Thursday’s rally in Info Edge, the outperformance threshold has come down.

An inclusion in the Nifty index is considered to be prestigious for any company as it is the index of the country’s 50 blue chip companies. Besides, the move helps attract investment from passive funds.

Abhilash Pagaria, analyst at Edelweiss Alternative Research said if Info Edge gets added to Nifty, it could have a weightage of 55 basis points (bps), which could result in inflows of $110 million (Rs 820 crore). Avenue Supermarts, if added, could have a weightage of 72 bps, resulting into inflows of $140 million (Rs 1,040 crore), he added.

Nifty50 rejig

Stocks that could be removed
 

Indian Oil

Coal India

Stocks that could get added
 

Avenue Supermarts

Info Edge