Nestle India set to replace Indiabulls Housing in Nifty next month

So far, Nestle India wasn't part of the Nifty even as its total market cap exceeds over half of Nifty components

Nestlé India will be included in the Nifty a month from now. The multinational company is set to replace troubled NBFC Indiabulls Housing Finance in the broader index.

Analysts believe the change, effective from September 27, will trigger buying worth over Rs 900 crore in Nestlé India by exchange-traded funds (ETFs). 

Indiabulls Housing could see ETF selling of above Rs 300 crore, further weighing on its stock price that has already fallen nearly 50 per cent this year.  

Further, the other 49 Nifty components could see some reduction in their weight to accommodate Nestlé India, whose free-float market capitalisation is nearly thrice that of Indiabulls Housing. 

In other words, Nestlé India will have a much higher weight than Indiabulls Housing.

So far, Nestlé India wasn’t part of the Nifty even as its total market cap exceeds over half of Nifty components, given it is not listed on the NSE.

The bourse recently tweaked its index inclusion criteria to allow firms not listed on its platform to be part of Nifty indices. 

Nestlé India is exclusively on the BSE. However, it is traded on the NSE under the ‘permitted to trade’ segment. The change in criteria made Nestlé India eligible to be part of Nifty indices. 

It joins FMCG peers HUL, ITC and Britannia in the Nifty, in which the sector’s weight could surpass the 9-per-cent- mark. 

Shares of Nestlé India have rallied 5 per cent in the past one week, after the exchange revised the index inclusion criteria.