Indiabulls all set to be replaced by Nestle India in Nifty 50

Nestle India, a food and beverage company is all set to replace Indiabulls, a housing finance company, in the NSE Nifty 50 index. The benchmark index is one of the most tracked indices in India. Nestle India is successful in increasing its worth about 23 times over the last decade. 

The NSE Nifty 50 index gets reconstituted semi-annually in January and July. The NSE has constituted an index maintenance sub-committee, which conducts a periodic review of the index. In the committee’s latest review, it was decided that Nestle India replaces Indiabulls. 

Indiabulls has suffered severe losses in the last two review periods while Nestle India has seen steep growth. This development has possibly led to the removal of the stocks of Indiabulls Housing Finance Ltd. from the popular index of NSE Nifty 50. Indiabulls lost about 64% over the past year.

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As per a circular issued by the National Stock Exchange (NSE) yesterday, the changes will be effective from 27 September 2019. The latest development has weighed in on the prices of both the stocks. The shares of Nestle India rose by 0.36% while the shares of Indiabulls went down by 3.02% yesterday. 

Nestle India was expected to be included in the NSE Nifty 50 index last week as the company’s stocks had met the index reconstitution criteria. The NSE Nifty 50 is rejigged semi-annually based on six months data concluding in January and July. 

Typically, the substitution of stocks will be effective from the first working day after F&O ends in March and September. The market participants are notified four weeks in advance if there are any replacements of stocks in the index.