The Indian stock market is bracing for a potential reshuffle in the prestigious Nifty 50 index, with speculation mounting about the inclusion of BSE Ltd and InterGlobe Aviation (IndiGo) and the possible exclusion of IndusInd Bank and Hero MotoCorp. The semi-annual review, expected in August, will determine the final composition of the index, with changes likely taking effect in September.

BSE Ltd, Asia's oldest stock exchange, has witnessed a remarkable surge in its stock price, fueled by increased equity derivatives trading and anticipation surrounding the upcoming IPO of its larger peer, NSE. Despite being exclusively listed on the NSE, BSE appears to meet the necessary listing and trading criteria for Nifty 50 inclusion. The company's shares have soared nearly 120% from their March lows, reflecting strong investor confidence. However, it's worth noting that the stock was recently placed under the Additional Surveillance Measure (ASM) framework due to unusual price movement, high volumes, and concentrated client activity.

InterGlobe Aviation, the parent company of IndiGo, India's largest airline by market share, is another strong contender for Nifty 50 inclusion. IndiGo's shares have been on a steady rise, gaining 22% over the past six months, driven by rising passenger traffic and ambitious expansion plans. The airline intends to add one aircraft per week until 2030, aiming for a fleet of over 600 aircraft and increasing its international capacity share from 25% to 40%.

On the other side, IndusInd Bank and Hero MotoCorp are facing the possibility of being excluded from the Nifty 50. IndusInd Bank shares have plunged by 11% over the past six months amid fraud speculations, potentially impacting its eligibility for continued inclusion. On the other hand, Hero MotoCorp has given 76.9% return for 3 years which is greater than Nifty 50 return of 63.6%.

The Nifty 50 is reviewed semi-annually, based on six-month data ending January 31 and July 31. The NSE considers the average six-month free-float market capitalization as of the cut-off date to determine the stocks that enter the index. To qualify for inclusion, a stock must have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations, for a basket size of Rs. 100 Million. Companies that are allowed to trade in the Futures and Options (F&O) segment are also eligible.

The potential reshuffle could trigger significant fund flows as passive index funds realign their portfolios to match the updated composition of the index. Inclusion in the Nifty 50 typically leads to increased demand for a stock, driving its price upward, while exclusion can result in selling pressure.

It's important to note that these are just potential changes, and the final decision will be made during the semi-annual review in August. Investors should closely monitor the performance of these companies and await the official announcement before making any investment decisions.