The NIFTY 50 Inclusion Trade: Does It Still Work? | The Long & The Short Ep. 40

Open a free demat and trading account online at Zerodha: https://zerodha.com/open-account/?c=Z... Welcome to The Long and The Short — a show where you can expect an honest take on trading, something you won't hear elsewhere. I'm your host, Sandeep Rao (SEBI Registered Research Analyst – INH000013059). In this episode, we're asking a deceptively simple question: when a stock gets added to Nifty 50, is there actually an edge in trading it? Passive funds have to buy the new entrant. Demand should rise. Price should follow. The logic is clean — but does the data back it up? We go through 33 Nifty 50 inclusion events from 2015 to 2025 and track what actually happened — both before the announcement and after. The results are a mixed bag, and the more interesting story might not be where you expect it. We also flag a key limitation in the test design and what the natural next step would be if you want to take this analysis further. 📌 Chapters: 0:00 Introduction 2:35 How Nifty 50 Rebalancing Works 4:42 The Hypothesis: Can You Get Ahead of the Buying? 6:34 Post-Inclusion Forward Returns: What the Data Shows 8:59 Equity Curve & Strategy Performance 11:12 Pre-Inclusion Backward Returns: The Flip Side 12:47 The Statistical Trap in Backward Returns 16:10 Pre vs Post Inclusion: Side-by-Side Comparison 18:55 Closing Thoughts If you prefer reading, we've written a post about this episode here: https://inthemoneybyzerodha.substack.... Do check out our newsletter "Aftermarket Report" where we do a quick daily wrap-up of what happened in the markets, both in India and globally. here: https://aftermarketreport.substack.com/ Check out Varsity Live, a hands-on way to learn finance with experts. Instead of only listening, you practice in real time through activities like personal finance planning, technical charting, balance sheet analysis, and more: https://varsitylive.zerodha.com/home Disclaimer: Investments in securities are subject to market risks. Please read all related documents carefully before investing. SEBI registration does not guarantee the performance of the intermediary or assure returns to investors. The securities mentioned are for illustrative purposes only and do not constitute a recommendation. By proceeding, you acknowledge and agree that any returns shown on this platform are solely for informational purposes. They are not intended to serve as advertisements or promotional material, nor should they influence your investment decisions. Trading and investment decisions should be made at your own discretion, and it is strongly advised to consult a qualified financial advisor before acting on any information provided. Note: Some image(s) may have been created using Al, no copyright infringement is intended. About Zerodha At Zerodha, we simplify complex financial topics to empower you with the knowledge to make smarter investment choices. Whether you're just getting started or looking to sharpen your skills, we’re here to help you navigate the financial world with clarity.