Zomato and Jio Financial Services are set to enter the Nifty 50 index from March 28, 2025, replacing BPCL and Britannia Industries. This shift is expected to inflate Nifty 50’s P/E ratio by 2.5% and marks a broader trend of new-age stocks replacing traditional economy companies

The Nifty 50 index, India’s benchmark for stock market performance, is undergoing a major reshuffle. Zomato and Jio Financial Services will be added to the index, replacing BPCL and Britannia Industries, effective March 28, 2025. This change is part of the National Stock Exchange’s semi-annual review process, which evaluates stocks based on factors like market capitalization, trading volume, and liquidity.
The inclusion of high P/E ratio new-age stocks (Zomato at ~320x and Jio Financial at ~96x) in place of low P/E ratio traditional companies (BPCL at 8x and Britannia at 57x) is expected to inflate the Nifty 50’s valuation by 2.5%. This marks a continued shift towards technology-driven and consumer-focused stocks in India’s leading stock index.

The Big Change: Who’s In and Who’s Out?

According to the National Stock Exchange (NSE), the following changes will take place in the Nifty 50 index:

Stocks Entering Nifty 50:
– Zomato (Trailing P/E ~320x)
– Jio Financial Services (Trailing P/E ~96x)

Stocks Exiting Nifty 50:
– BPCL (Trailing P/E ~8x)
– Britannia Industries (Trailing P/E ~57x)

Impact on Nifty 50 Valuation

The entry of Zomato and Jio Financial Services will increase the Nifty 50’s trailing P/E ratio by 2.5%, pushing it from 22.1x to 22.6x.
Traditional sectors like financials and energy (excluding Reliance) have seen a 40% decline in valuation since 2018, with their average P/E falling from 26x to 16x. Meanwhile, new-age sectors such as IT, consumer discretionary, and fintech have seen the largest expansion in P/E multiples.
Had the 2018 Nifty 50 index remained unchanged, its trailing P/E today would have been 8-10% lower at around 20x.

Stock Performance and Market Reaction

Following the announcement of index inclusion, both Zomato and Jio Financial Services saw initial market reactions:

Zomato’s Performance:
+6.5% rise in the last five trading days
+6.6% increase over the past month
-11.4% loss over six months
+40% stock value gain over the past year

Jio Financial Services’ Performance:
+5% rise in the last five trading days
-4.6% drop in the past month
-28% decline over six months
-29% decline since the beginning of last year

Despite recent short-term fluctuations, analysts predict that mutual funds, ETFs, and institutional investors tracking Nifty 50 and Sensex will now be required to buy Zomato and Jio Financial shares, boosting liquidity and price appreciation.
On the other hand, BPCL and Britannia Industries will face over ₹2,000 crore worth of passive selling, as index funds tracking Nifty 50 reduce holdings in these stocks.

Changes in Other Nifty Indices

Apart from Nifty 50, the NSE announced changes in other indices as well:

Nifty 100:
– Exclusions: BHEL & IRCTC
– Additions: Bajaj Housing Finance, CG Power & Hyundai Motor India

Nifty Midcap 150:
– Exclusions: Bayer Cropscience, CG Power, Delhivery and IDBI Bank
– Additions: Indian Hotels, Metro Brands and Poonawalla Fincorp

These shifts indicate an ongoing preference for consumer, fintech, and technology-driven businesses over traditional industrial sectors.