BSE to replace Wipro in Nifty 50 from Sep 30 after review

Index reshuffle announced

BSE Ltd, the stock exchange operator, will replace IT major Wipro in the Nifty 50 index starting September 30. The change comes after the semi-annual review by NSE Indices, which manages India's benchmark indices.

The move marks a significant shift in the composition of the country's most-tracked equity index, which is used by passive funds and derivatives traders alike. BSE's inclusion reflects its rising market value, while Wipro's exit underscores the challenges faced by legacy IT firms in the current market cycle.

Why BSE, why now

BSE has seen its stock price surge over the past year, driven by robust volumes in the derivatives segment and a broader rally in financial exchanges. The company's market capitalisation has crossed several milestones, making it a natural candidate for index inclusion under NSE's review criteria.

NSE Indices periodically reviews the Nifty 50 based on six-month data ending in January and July. Stocks are added or removed based on average market capitalisation, free-float factors, and liquidity. BSE reportedly met all thresholds comfortably, while Wipro's average daily turnover and market cap fell below the qualifying level.

Impact on fund flows and trading

The replacement will trigger rebalancing by passive funds that track the Nifty 50. These funds will need to sell Wipro shares and buy BSE shares to align their portfolios with the new index composition. Analysts estimate that BSE could see inflows of several hundred crore rupees, while Wipro may face selling pressure.

Derivatives contracts on the Nifty 50 will also be adjusted, as the underlying index composition changes. Market participants have been advised to review their positions ahead of the effective date.

Wipro's struggle in a shifting IT landscape

Wipro, once a bellwether of India's IT outsourcing boom, has lagged its peers in recent years. The company has faced slower revenue growth, high attrition, and a weak deal pipeline compared to rivals like Infosys and TCS. Its stock has underperformed the broader market, leading to a steady decline in its index weight over the past several reviews.

The exit from the Nifty 50 is a symbolic blow for Wipro, which has been a part of the index for over two decades. However, the company's management has reiterated its focus on cloud and AI-driven transformation, hoping to regain investor confidence.

What to watch next

The new index composition will take effect from September 30, with BSE replacing Wipro in the Nifty 50. Investors will watch how fund flows play out in the coming weeks, and whether Wipro's exit accelerates its stock decline or prompts a turnaround. NSE Indices will conduct its next review in January, where further changes could be on the cards.