Starting Dec 31, the NSE will add Yes Bank and Union Bank to the Bank Nifty index, a move that could bring roughly $67 million of new money into these stocks.
Why the Change Happened
SEBI asked the exchanges to have at least 14 stocks in non‑benchmark indices like Bank Nifty. The rule also limits how much any one stock or the top three stocks can weigh in the index.
New Banks and Expected Money Flows
- Yes Bank – projected inflow of about $35 million
- Union Bank – projected inflow of about $32 million
With these two additions, the Bank Nifty will have 14 constituents instead of the current 12.
Weight Shifts for Other Banks
Several existing banks are set to see modest weight increases, which could attract $11‑$16 million each:
- Federal Bank
- IDFC First Bank
- Punjab National Bank
- IndusInd Bank
- AU Small Finance Bank
Conversely, the two biggest outflows are expected from:
- ICICI Bank – about $87 million withdrawn
- HDFC Bank – about $86 million withdrawn
Regulatory Cap on Top Three Banks
The NSE will lower the combined weight of the three biggest Bank Nifty stocks – HDFC Bank, ICICI Bank and State Bank of India – from 60% to 43%. The reduction will be phased over four months (Dec – Mar), prompting passive funds that track the index to rebalance their holdings.
Ripple Effect on the Nifty 50
Changes in the broader Nifty 50 are also expected:
- Bharti Airtel – likely inflow of about $59 million
- Eternal – likely inflow of about $29 million
- IndiGo, Mahindra & Mahindra, and HDFC Bank – each may see $8‑$18 million of new money
- Infosys – projected outflow of roughly $78 million
- Adani Ports – projected outflow of around $32 million
- Reliance Industries, HCL Technologies, Bajaj Finance – modest weight reductions
Bottom Line for Retail Investors
The addition of Yes Bank and Union Bank could create fresh buying opportunities, especially if you follow index‑linked funds. However, the cap on the top three banks means some funds may sell portions of HDFC, ICICI and SBI, potentially adding short‑term volatility.
Remember, this is perspective, not prediction. Do your own research before making any investment decisions.