The German stock market is experiencing a period of consolidation among its leading companies at the end of the first quarter of 2026, while significant momentum is building in the mid-cap and smaller-cap segments. As the index provider Stoxx, a subsidiary of Deutsche Börse, announced on Wednesday evening following its regular review, the composition of the DAX 40 will remain unchanged. This means that the return of Deutsche Lufthansa to the top tier of the German stock market, a topic of discussion among market participants and analysts alike, has been postponed for the time being.
While the top-performing stocks remain stable, a flurry of activity is expected in the MDAX and SDAX indices on March 23rd, characterized by the inclusion and exclusion of prominent companies such as Deutz, Jenoptik, and Carl Zeiss Meditec. These quarterly adjustments are of considerable importance to institutional investors and fund managers, as they result in an immediate reallocation of capital amounting to billions. The decisions are based on hard criteria such as the free-float market capitalization and trading volumes of recent months, with the industrial and technology sectors being particularly responsible for the index movements.
The postponed return of the crane company
Deutsche Lufthansa will have to wait a while longer before it can rejoin the illustrious circle of Germany's 40 most valuable listed companies. For more than three decades, the airline was a fixture in the DAX, until the massive economic disruptions during the global pandemic forced its relegation to the MDAX in 2020. In recent months, positive business figures and a recovery in international travel had fueled expectations that the group's market capitalization would now be sufficient for a return to the DAX. However, the decision by ISS Stoxx shows that the gap to the companies currently in the index was not yet large enough to trigger an automatic replacement or to displace any of the existing stocks.
Analysts attribute the failure to gain promotion, among other things, to the current valuations of competitors in the leading index. Since no company met the strict exit criteria under the fast-exit or fast-entry rules, the index provider saw no reason for an unscheduled rotation. For Lufthansa, this means it remains the largest component of the MDAX, which provides a degree of stability for the mid-cap index but is a blow to the airline's reputation. The next regular review in June will offer another opportunity for a bid to join the premier league of the German stock market.
Major rotation in the second and third tiers of the stock market
The situation below the DAX is considerably more dynamic. On March 23, several companies will swap places, reflecting the ranking of the German economy. Among the winners of the current review are the engine manufacturer Deutz, the steel group Salzgitter, and the optics specialist Jenoptik. These three companies are moving from the SDAX to the MDAX. For Salzgitter and Deutz in particular, this is a sign of the strengthened position of traditional industries in a volatile market environment. Jenoptik is benefiting from the continued high demand for optical systems and semiconductor equipment, which has sustainably boosted the Jena-based company's market capitalization.
Conversely, some well-known names are being relegated. TeamViewer, the remote maintenance software specialist, the optician group Fielmann, and the medical technology manufacturer Carl Zeiss Meditec are being relegated to the SDAX. While Fielmann is struggling with a challenging market environment in brick-and-mortar retail, Carl Zeiss Meditec's relegation reflects a correction following a period of extremely high valuations. TeamViewer, on the other hand, has had a checkered history since its IPO and, as a result of its relegation, will lose visibility for international investors who primarily focus on the MDAX.
Special case Schaeffler and technical adaptations in the railway sector
Adjustments driven by corporate changes and acquisitions will take effect as early as March 9th. Automotive supplier Schaeffler will return to the MDAX, replacing real estate company Deutsche Wohnen. This change is a direct consequence of the ongoing consolidation in the automotive sector, where Schaeffler has strengthened its market position through strategic acquisitions and a strong presence in drive technology. In return, Einhell's preferred shares will move into the SDAX, bringing the Lower Bavarian tool manufacturer back into sharper focus for institutional investors.
Another interesting change is taking place in the software provider sector. The Karlsruhe-based company Init Innovation In Traffic Systems, a specialist in IT solutions for public transport, is replacing PSI Software in the SDAX. Init recently scored points with major contracts in the areas of digital ticketing systems and fleet management solutions. PSI Software, on the other hand, lost ground due to project-related delays and a weaker order situation, which ultimately led to its removal from the Deutsche Börse's selection index.
Methodology of index testing and its impact on the capital market
The quarterly reviews conducted by ISS Stoxx follow a strict set of rules designed to guarantee transparency and reliability for the German financial center. Companies are ranked according to their free-float market capitalization. This means that only the value of shares actually traded freely is considered, not those held by large shareholders or the state. Trading volume is also taken into account to ensure that the stocks are liquid enough to handle large transaction volumes.
For the financial world, these shifts are far more than mere statistical footnotes. Large index funds, known as ETFs (Exchange Traded Funds), precisely replicate the composition of the DAX, MDAX, and SDAX. If a company is added to the index, these funds must buy the corresponding shares. If a stock falls, it must be sold. This often leads to massive trading volumes on the day of the index change and can increase the volatility of the affected stocks in the short term. But for active fund managers, index inclusion is also an important signal regarding the quality and stability of an investment.
Outlook for the stock market year 2026
The stability of the DAX shows that Germany's major blue-chip companies are firmly in the saddle despite global economic challenges. Companies from the chemical, automotive, and insurance sectors continue to dominate. However, pressure from below is increasing. The dynamism of the MDAX demonstrates that medium-sized companies are able to rapidly gain market value through specialization and technological leadership.
For Lufthansa, returning to the DAX remains a stated goal of the company's management. The coming months will show whether the company can further increase its profitability to clear the necessary hurdles at the next review in June. Until then, the German benchmark index remains an exclusive club, its doors closed this spring while the cards were reshuffled on the lower levels of the stock market.