A noticeable pattern has emerged in the Nifty 50 index, where stocks that are newly added tend to be much more expensive than those that are being removed.

Currently, Zomato has a trailing P/E ratio of 307x, while Jio Financial Services has a trailing P/E ratio of 118x. On the other hand, Eicher Motors and BPCL, which are set to be removed, have trailing P/E ratios of 25.5x and 9.9x respectively.

According to a report from ICICI Securities, the average P/E ratio of stocks entering the index during changes has been around 60x since FY18, which is significantly higher than the median P/E ratio of exclusion stocks, which is around 10x. This difference highlights the growing valuation gap between incoming and outgoing stocks in the benchmark index.