Why Are Vedanta Power and Vedanta Iron & Steel Being Excluded From the Nifty Next 50?
What Is Happening in the Latest Nifty Next 50 Rejig?
According to research commentary from Nuvama, only Vedanta Power Ltd. and Vedanta Iron & Steel Ltd. are expected to be excluded from the Nifty Next 50 index in the current phase of index rebalancing. The adjustment is expected to occur during the closing session, with the changes becoming effective after market close.
Index rebalancing can trigger buying or selling by passive funds and ETFs that track benchmark indices. However, such flows are mechanical in nature and may not necessarily reflect changes in a company's business fundamentals.
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Nuvama noted that these two entities did not hit the lower price band on two consecutive trading sessions, leading to their scheduled exclusion under the applicable index methodology.
Expected Passive Outflows
| Entity | Estimated Weight | Estimated Outflow (₹ Cr) |
|---|---|---|
| Vedanta Power | 0.3% | Around 117 |
| Vedanta Iron & Steel | 0.2% | Around 58 |
The remaining demerged entities—Vedanta Aluminium and Vedanta Oil & Gas—are reportedly yet to be excluded from the Nifty Next 50. Their respective exclusion dates are still awaited and may occur in subsequent sessions.
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Index exclusions can create temporary volatility because passive funds may rebalance their holdings. Long-term investors often monitor whether such moves materially affect liquidity or business prospects before drawing conclusions.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that index rebalancing events can generate short-term trading activity but should be evaluated alongside company fundamentals, liquidity and long-term business prospects rather than passive fund flows alone.
Related Queries
What is Nifty Next 50 index rebalancing?
How do passive fund outflows affect stock prices?
Why are demerged companies excluded from indices?
SEBI Disclaimer: This article is purely for educational and informational purposes and should not be construed as investment advice or a recommendation to buy or sell any security. Please consult your SEBI-registered investment adviser before making investment decisions.
