Market participants said that the inclusion in a major index such as Nifty Next 50 will lead to some inflows from domestic passive funds that track the index. More importantly, the inclusion is also a sign of the improving health of a bank that was on the brink of insolvency a year ago.
Shares of the bank have risen 38 per cent over the past eight months as the new management under SBI’s leadership has been trying to clean up the lender’s balance sheet and improve capital buffers.
A little over a year ago, the lender was rescued by a consortium of banks led by SBI as it faced the potential of bankruptcy due to its large bad loans and plummeting capital buffers.
Market participant believes that the inclusion in the Nifty Next 50 index could in the future lead to YES Bank’s inclusion in the benchmark Nifty50 index since the former serves as an incubation for potential Nifty50 constituents.