El Al and Doral Energy to Join Leading Tel Aviv Stock Exchange Index

Two Israeli companies, El Al Airlines and Doral Energy, are set to be included in the prestigious Tel Aviv 35 Index starting in early November, marking a significant shift in the composition of the market's leading benchmark. They will replace three established companies: Dimeri, Shufersal, and Cannon, which will be moved to the Tel Aviv 90 Index. The most impactful event is anticipated on November 5, when index-tracking mutual funds and ETFs will rebalance their portfolios to align with the new index structure. This rebalancing is expected to involve billions of shekels in buying and selling activity, potentially causing sharp price fluctuations in affected stocks.

The inclusion in a major index like the Tel Aviv 35 typically grants a company broader exposure. However, the market impact is complex, as some anticipated demand may already be priced into the stocks. The index itself will return to its standard 35-stock count after a temporary inclusion of 36 stocks. The primary driver of market movement will be the flow of capital into and out of these index-tracking funds. When a company enters the Tel Aviv 35, these funds buy its shares, while exiting companies face sales pressure from the same funds. The net demand or supply for each stock will depend on the total assets under management in each index's funds and the companies' new weightings.

Doral Energy, operating in the renewable energy sector, is expanding its U.S. operations and advancing major electricity generation and energy storage projects. The company is increasing its stake in its American operations to 53% to boost future revenue and profits, though this requires significant investment and makes it sensitive to financing costs and grid connection timelines. The airline reported substantial revenue and a doubled net profit in the second quarter of 2026, though potential risks include increased competition from returning foreign carriers and rising jet fuel costs.

The companies exiting the index, Dimeri, Shufersal, and Cannon, face their own challenges. Dimeri is navigating a slowdown in the housing market and declining profitability, while Shufersal is dealing with intense competition in the food sector and weaker in-store sales. Cannon, a holding company, is primarily affected by the performance of its energy investments. The Tel Aviv Stock Exchange has also adjusted its mechanism for new index entrants, phasing in their weightings over several updates to mitigate sharp market volatility, though this new mechanism does not apply to El Al and Doral's transition between the Tel Aviv 90 and Tel Aviv 35 indices.

Official confirmation of the new index composition is expected on October 29, with the changes taking effect at the market close on November 5. Until then, the market will be assessing the potential demand and supply dynamics for each stock. While inclusion in the Tel Aviv 35 offers greater visibility for El Al and Doral, their future stock performance will ultimately hinge on their business results and market valuation.