*Nifty50 will be no longer undervalued* NSE to add Zomato and Jio Finance in Nifty50 index - It will inflate the PE ratio of Nifty by almost 10% from 20.4 currently to around 22.8 Current PE ratio of stocks that will be removed from Nifty50 - BPCL: 7 Britannia: 54 While PE of stocks that will be added are - Zomato has 335 and Jio: 92 Current Weightages - BPCL: 0.60% Britannia: 0.64% While Zomato would have a weightage of 0.70% to 0.80%, and Jio Financial: 0.55% to 0.65%, Weighted P/E Contribution of Outgoing Stocks - BPCL:0.60%×7=0.0060×7=0.042 Britannia:0.64%×54=0.0064×54=0.3456 Total Contribution Out:0.042+0.3456=0.3876 Weighted P/E Contribution of Incoming Stocks- Zomato:0.75%×300=0.0075×300=2.25 Jio Financial Services:0.60%×92=0.0060×92=0.552 Total Contribution In:2.25+0.552=2.802 Net Change in P/E Contribution - Net Change = Total Contribution In - Total Contribution Out 2.802−0.3876=2.4144 Impact on Nifty 50 P/E: New Nifty P/E = Current P/E + Net Change 20.4+2.4=22.8 ( Based on 23rd February calculation ) *So we are no longer in undervalued zone, and Nifty can correct further.*