Potential Nifty Shake-Up: Jio Financial and Zomato Eye Inclusion if F&O Criteria Met

In a significant development, domestic brokerage firm JM Financial has forecasted the inclusion of Jio Financial Services and Zomato into the Nifty index, contingent on their addition to the futures and options (F&O) segment. This prediction comes amidst a broader discussion about the potential reshuffling within the Nifty index and the implications for various market players.

Possible Changes to the Nifty Index

JM Financial’s report highlights that if Jio Financial Services and Zomato are not added to the F&O segment, Trent and Bharat Electronics (BHEL) might be included in the Nifty Index instead. This potential inclusion is based on the relative free float market capitalization of these companies compared to others currently in the index. The brokerage notes, “It is interesting to note that JIOFIN and ZOMATO have an average free float market cap higher than TRENT and BHEL. However, they are not likely to be included in the Nifty as they are not a part of the F&O segment.”

The report further emphasizes that the inclusion of Jio Financial Services and Zomato in the F&O segment would pave the way for their addition to the Nifty index. This scenario could significantly impact the composition and performance of the index, given the substantial market caps of these companies.

Rebalancing and Market Predictions

The rebalancing of NSE indices is scheduled to be announced in August, with changes becoming effective from September 30. The index provider bases its decisions on the average free float market capitalization during the period from February 1 to July 31. This rebalancing process is crucial for ensuring that the index accurately reflects the current market landscape and the most influential companies within it.

Emerging Tech Stocks and F&O Segment

In a related development, Nuvama Institutional Equities has noted that several new-age tech stocks, including Zomato, Paytm, PB Fintech, Nykaa, and Delhivery, might enter the F&O trading segment. This follows a proposal by the Securities and Exchange Board of India (SEBI) to revise the eligibility criteria for the derivatives market. SEBI’s consultation paper highlights the need to align the eligibility criteria with the current market growth, aiming to enhance price discovery and market liquidity through the derivatives market.

Understanding Derivatives and Their Market Impact

For those unfamiliar, derivatives are financial contracts whose value is derived from underlying assets such as stocks, commodities, or other financial instruments. Common types of derivatives include forward contracts, swap contracts, futures, and options. These instruments are traded either over-the-counter (OTC) or through exchanges like the BSE and NSE in India. The derivatives market plays a vital role in the financial ecosystem by providing mechanisms for hedging risks, speculating on price movements, and improving overall market liquidity.

In Conclusion, The potential inclusion of Jio Financial Services and Zomato in the Nifty index, contingent on their addition to the F&O segment, could mark a significant shift in the market landscape. As the rebalancing of NSE indices approaches, investors and market participants will be closely monitoring these developments. The broader implications of SEBI’s proposed changes to the derivatives market eligibility criteria could further influence the dynamics of the Indian stock market, highlighting the importance of strategic decisions and regulatory adjustments in maintaining a robust and efficient financial system.