What will happen if a stock is added or removed from nifty50 ?

when stock gets included into nifty 50

 A news of BHEL and Idea being removed from the Nifty50 must have caught your eyes. If u have been in the stock market or following it for a while you must have heard of such news of stocks getting added to or removed from or replaced by others in the Nifty 50 quite a number of times.

Ever wondered what this means? Let us try to understand the implications of addition or deletion of stocks from Nifty 50. But before we go into the details let us try to understand what Nifty 50 is.

Nifty 50 is ……

The NIFTY 50 index is an index of 50 stocks which are believed to be the broad representatives of the market. NIFTY is National Stock Exchange (NSE) of India’s benchmark index for Indian equity market comprising of 50 stocks belonging to 23 diverse sectors. It is widely followed by stock market investors. Following is the list of stocks comprising NIFTY 50

A stock that is being added to the index gets positive investors reaction as such inclusion is taken to be a sign of better future prospects and good quality of the stock and also ETFS and other investors start buying the stock to track the index pushing the price up(You can track index through SAS Online Website). Its price usually heads north once the news of its inclusion is out. The stock on removal from the “elite” group attracts negative investor sentiment and the stock price can see some corrections.

But that’s not a hard and fast rule. In February 2016, the Nifty underwent reshuffling to replace. Cairn India, Punjab National Bank and Vedanta by Aurobindo Pharma, Bharti Infratel, Eicher Motors and Tata Motors (DVR). But while prices of all 3 stocks excluded rose significantly since exclusion, prices of the ones included have only moved at a pace that can only be christened assnail’s pace in comparison.

 

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