Nifty 50 Rejig: Wipro Faces Potential Exclusion, with BSE or TVS as Likely Replacements

Wipro, one of India's largest IT services companies and a long-standing constituent of the Nifty 50 index, is facing potential exclusion in an upcoming rebalancing of the benchmark. If removed, the stock could be replaced by either BSE Limited (formerly known as the Bombay Stock Exchange) or TVS Motor Company, according to CNBC-TV18 Markets.

Both BSE and TVS Motor have been among the notable market performers in recent periods, with their share prices having appreciated significantly—characterizing them as multi-baggers in market terminology. BSE, which listed on the NSE in 2017, has seen its market capitalization climb sharply amid a surge in investor participation and trading volumes on Indian exchanges. TVS Motor, a leading two-wheeler and three-wheeler manufacturer, has also benefitted from strong demand and expansion into international markets.

Wipro's potential exclusion underscores a period of relative underperformance compared with larger IT services peers such as Tata Consultancy Services and Infosys, which have maintained or grown their weight in the index. While Wipro remains a major company by revenue and headcount, its free-float market capitalization has not kept pace with faster-rising constituents.

Historical Precedent

Wipro has been part of the Nifty 50 since the index's early years. The IT major was very briefly excluded from the Nifty 50 index between April and September 2013, owing to its corporate demerger, when the company had hived off its non-IT business units into a separate entity. After the demerger process was completed, Wipro was readmitted to the index.

If Wipro is excluded in the upcoming rejig, it would mark the first time the stock is removed from the index for reasons other than a corporate restructuring.

About the Nifty 50 Rebalancing

The Nifty 50 is the National Stock Exchange of India's (NSE) flagship benchmark index, comprising 50 of the largest and most liquid Indian companies across key sectors. The index is maintained by NSE Indices Limited and is reviewed periodically—typically on a semi-annual basis—to ensure it accurately reflects the current state of India's equity markets. During each review, companies may be added or removed based on criteria including free-float market capitalization, liquidity, and other eligibility requirements. Under NSE's methodology, a stock becomes eligible for inclusion if its average free-float market capitalization is at least 1.5 times that of the smallest constituent in the index.

Index rebalancing events often trigger significant trading activity, as passive funds and exchange-traded funds (ETFs) that track the Nifty 50 must adjust their portfolios to mirror the updated index composition. This can result in substantial inflows or outflows for the stocks being added or removed. Nifty 50-linked passive assets represent a large pool of capital, meaning index changes can move significant volumes in a short window around the effective date.

The potential exclusion of Wipro would reflect the relative shift in market capitalization rankings among India's largest listed companies, as newer entrants and high-performing stocks have risen in prominence on the exchange. India's equity markets have grown substantially in recent years, with the combined market capitalization of listed companies reaching record levels and enabling newer firms to qualify for benchmark inclusion.

Source: CNBC-TV18 Markets