On May 1, 2026, Vedanta Limited, led by Anil Agarwal, completed its long-anticipated demerger into five distinct entities. This split has significant implications for mutual funds, particularly impacting the Nifty Next 50 index, where Vedanta's weight has decreased from 5.2% to 2.3%. As a result, passive index funds and exchange-traded funds (ETFs) are mandated to sell off shares to adjust their portfolios accordingly. The price of Vedanta shares corrected sharply to ₹289.50 from over ₹770 prior to the demerger. Analysts suggest that much of the anticipated selling pressure was absorbed during a special pre-open session on April 30, 2026. However, the stock is expected to remain volatile as the market adjusts to the structural changes. Investors now face a lock-in period of four to eight weeks before the new entities—Vedanta Aluminium, Vedanta Power, Oil & Gas, and Iron & Steel—are officially listed. This interim phase poses challenges for fund managers as they hold static values in their portfolios without the ability to trade. While passive funds must adhere to index rules, active managers are beginning to reevaluate their investment strategies, focusing on the individual value of the newly formed entities. The potential for a 'pure-play premium' will become clearer as these entities establish their own trading histories.