Shriram Finance may be the newest Nifty 50 entrant — Here are the potential inflows

Shriram Finance, which has gained more than 12% since the beginning of this year, is poised for potential inclusion in the country's closely monitored benchmark index, Nifty 50, likely replacing UPL. The official list for the Nifty 50 rejig will be announced in late February this year.

The non-banking financial company (NBFC) could witness an inflow of up to $245 million from the passive funds if included in India's biggest index. This change could also bring $107 million outflow from UPL, according to Nuvama Alternative and Quantitative Research.

Domestic and global passive funds, such as exchange-traded funds (ETFs), structure their portfolios based on these indices.

The UPL stock has given flat returns since it joined Nifty in September 2017. It closed 1.48% higher at ₹552.25 apiece on Saturday.

Meanwhile, the potential candidates to enter Nifty Next 50 include the recently listed Jio Financial Services and Adani Power from the Adani Group stable. While Jio Financial's entry is expected to lead to inflows of $77 million, that of Adani Power will trigger inflows of $47 million, as per calculations by Nuvama.

State-owned IRFC, REC, PFC, Polycab India and Union Bank of India will also enter the index. The entry of these four stocks may lead to cumulative inflows of $170 million.

Shriram Finance, Adani Wilmar, Muthoot Finance, PI Industries, Procter & Gamble Hygiene, Colgate Palmolive, and Info Edge are the stocks that are likely to exit the Nifty Next 50 index.

Additionally, the domestic brokerage said that Canara Bank will join Nifty Bank, displacing Bandhan Bank. Canara Bank's entry will likely result in inflows of approximately $36 million, whereas Bandhan Bank's exit may trigger outflows of around $39 million.

The brokerage firm does not expect any changes in the Nifty IT index in the upcoming review.

The market capitalisation cut-off date to determine the eligibility of stocks that will stay or exit the indices is January 31 and the exchange is expected to announce the results in the second half of February, which will come into effect from March 31.

: The stock market is engaged in a complete session on Saturday, January 20, and will be closed on Monday, January 22, due to a public holiday in Maharashtra state to mark the inauguration of the Ram Temple in Ayodhya city.