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Friday, December 9, 2022

Zomato, Paytm to Enter Nifty Next 50 Index, Indian Oil Out

Zomato, One97 Communications (Paytm), and FSN E-Commerce Ventures (Nykaa) are among the companies that will be included in the Nifty Next 50 index as of 31 March. The change in standards has made it possible for these inventory items to be listed this year.

As a part of its evaluation, NSE Indices Limited’s Index Maintenance Sub-Committee – Equity (IMSC) is determined to modify eligibility standards of NIFTY fairness indices and alternative inclusion of shares in various indices as listed below. NSE introduced these changes in a round that will take effect on March 31, 2022.

The New Methodology

Under the new methodology, constituents must have a minimum itemizing history of one calendar month on the closing date as opposed to three months under the earlier approach.

As of the closing date, constituents will be required to have a minimum itemizing history of one calendar month instead of three months previously. The result was listing shares such as Nykaa, Paytm, Policy Bazaar, and Latent View after 2021. New standards have helped Nykaa and Paytm get into the Nifty Next 50 from a passive monitoring perspective, according to Abhilash Pagaria, Head Alternatives Analysis at Edelweiss Securities.

As part of the Nifty Next 50, Nykaa, Indian Oil Corporation (IOC), MindTree Ltd, Paytm, SRF Ltd and Zomato Ltd will replace Apollo Hospitals Enterprise, Aurobindo Pharma HPCL, IGL, Jindal Steel & Power and Yes Bank.

Tech stocks that were unsettled have found some relief with the move. Due to the bloodbath occurring on Dalal Street, Zomato, Paytm, and Nykaa stocks will continue to be under tremendous selling pressure.

Shares of fintech major Paytm crashed by 5% on 24th February and hit an all-time low of Rs. 780 on BSE. According to latest data, the stock was seen trading 60% lower than its all-time high of Rs. 1,961.05. At the end of intraday trading on Thursday, Paytm’s market cap fell to Rs. 50,798 crore.

Stocks of Indian tech companies fell

On 24th February, Zomato stock fell nearly 7% during trading, settling at Rs. 78. This represents less than half of its debut on the bourse. It had previously hit an all-time high of Rs. 169.10.

On Thursday, Nykaa’s shares fell over 4% and ended the day at Rs. 1,312.95 on the BSE. As a result, the company’s market capitalization fell to Rs. 61,658 crore.

In the wake of Russian President Vladimir Putin’s declaration of war on Ukraine, Indian tech stocks saw a steep decline. With the correction in the United States public markets and the possibility of interest-rate hikes, the situation has worsened.

The Indian tech stock market is in bad shape, and current global events have not helped matters. Nykaa’s settlement of a copyright infringement litigation with the international company L’Oreal offered a glimmer of hope, but the overall mood remained depressed. We will continue to see this situation for the next few days; however, it remains to be seen if these stocks will rebound.

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