Nifty Rejig: Wipro could be excluded for the first time, replaced by either of these multi-baggers

Bengaluru-based IT services provider Wipro Ltd. could be a potential exclusion from the Nifty 50 index when the NSE indices rejig takes place later on Monday, August 10, according to Nuvama Alternative & Quantitative Research.

In case that does happen, it will become the first instance of Wipro being excluded from the benchmark index, having been part of it since its inception three decades ago.

Wipro was very briefly excluded from the Nifty 50 index between April and September 2013, due to its corporate demerger, when it had hived off its non-IT business units.

In case Wipro is excluded, it could trigger outflows worth $246 million from the stock, Abhilash Pagaria of Nuvama Alternative projected in his note

Who Can Replace Wipro On the Nifty 50?

In case Wipro is excluded, it could be replaced by two potential candidates. One is the Bombay Stock Exchange (BSE), which, according to Nuvama Alternative, ticks all the boxes for an inclusion in the benchmark index.

"In case the Nifty indices committee makes any methodology changes to the Nifty 50 index today, we believe TVS Motor could be a probable contender to replace Wipro," the note added.

An inclusion of BSE in the Nifty 50 index could result in inflows of as much as $741 million, according to Nuvama Alternative.

Wipro's potential exclusion could take it down to the Nifty Next 50 index, which could also see potential inclusions such as Vedanta Aluminium, Hitachi Energy, Vodafone Idea, Polycab, and BHEL. These five names could replace stocks such as Indian Hotels, REC, United Spirits, Shree Cement, Lodha Developers, and Mazagon Docks.

An inclusion of Vedanta Aluminium in the Nifty Next 50 could result in inflows worth $143 million, while inclusions of Vodafone Idea, Polycab, and Hitachi Energy could bring inflows worth $71 million, $92 million, and $75 million respectively.

As per the new SEBI Circular, REITs are now also eligible to be included in the Nifty equity indices. As a result, Nuvama is anticipating two inclusions. Embassy Office Parks REIT is a borderline candidate for inclusion in the Nifty Midcap 150 index, while Brookfield India REIT is likely to be included in the Nifty Smallcap 250.

Shares of Wipro are trading 0.6% lower at ₹186.45, while those of BSE are trading 1.1% higher on Monday at ₹3,496.1. Shares of BSE have gained over 2,600% over the last five years.