Zomato Inclusive of BSE Sensex for First Time
In a historic move, Zomato will become the first new-age tech stock to be included in the prestigious BSE Sensex, replacing JSW Steel. This sudden overhaul of the 30-stock blue-chip index signals a significant shift in the Indian business landscape and underscores the growing prominence of the digital sector.
This year's half-yearly rebalancing has seen the inclusion of Zomato join the ranks of India's most influential companies, marking a turning point for the country's economic growth. While this move is routine, it highlights the impact of digital disruptors in reshaping the Indian corporate landscape.
Historically, only a third of the companies in the Sensex were part of its oldest constituents; most have changed over the years. The last major overhaul occurred in 1996 when 15 stocks left and new entrants took their place. In recent times, one-sixth of the names have been removed, signaling intense competition among corporate giants.
Market Sensations: Zomato's Surging Stock
Zomato's inclusion is largely driven by its rapid stock growth. Shares of Deepinder Goyal-led Zomato have surged an impressive 45% in the last six months and 133% this year alone. In contrast, JSW Steel's shares have only risen by 1.1% over the same period.
Zomato's remarkable turnaround is now powering its surge in value, with rapid financial improvement fueling investor enthusiasm. The company recorded outstanding growth in revenue and profit during Q2, largely driven by expansion in food delivery margins and near-break-even performance from its quick commerce operations.
Global Market Reaction
The inclusion and exclusion of stocks can impact portfolio adjustments, leading to stock price volatility for the affected companies. According to financial note Nuvama Institutional Equities, Zomato is expected to see significant inflows of $513 million whereas JSW Steel's exclusion will result in outflows worth $252 million.
A Shift in Economic Dominance
The BSE Sensex has long been regarded as a barometer for Indian economic sentiment. Recent data suggests the influence of these leading companies has grown, with their combined revenue now accounting for over 13% of India's total GDP – more than double its value a decade ago. However, this increased dominance also raises questions about corporate market power.
Market analysts must consider this shift in economic dynamics while addressing concerns around potential imbalances arising from the dominance of leading enterprises.
The Zomato-Driven Food Delivery Boom
While recent developments surrounding food delivery companies have led to antitrust investigations by India's regulatory body DGTA, their rapid growth will only further enhance their market presence.