Sesa Goa's Nifty weightage to increase from August 27

Sesa-Sterlite merger will be effective from August 28 and Sterlite will cease to trade from August 27. CNBC-TV18's Nigel D’Souza highlights the impact of this merger. On Tuesday, Sesa Goa will replace Sterlite in the Sensex, but on the Nifty its weightage would go up from around 0.45 percent odd to around 0.9 percent and this is because of the effective free-float factor coming into play.

Also Read: Sesa Goa soars 6% on inclusion in Sensex from August 27
Sesa Goa is not producing anything from Karnataka and Goa right now. Importantly, its stake in Cairn India comes to around Rs 80 per share. That stock is trading around Rs 165. So effectively it is paying around Rs 85 for operations that have not yet begun. Once it begins, a big kicker may come into this counter.
A larger number of shares would come into play and that is why a good amount of weightage will come in for Sesa Goa. Importantly, as far as FTSE goes, the weightage is likely to go up while MSCI is likely to come down. This as well is likely on the back of that freefloat factor which is keenly being monitored.
Number of shares would go up by roughly around 67 crore. So because of that you will see a big bump up in the freefloat market cap. Percentage wise it will not make a big difference because promoter shareholding would also go up but on the Nifty itself because of the freefloat factor, it would go up.
Sterlite will come out of the equation and we would see that in fact Sesa Goa would get included in the Sensex from tomorrow itself. However, the big one would be later this evening when outcome on Goa mining ban is expected to come out after almost a year. It is sitting on inventory of close to around 3 million tonne. Even liquidation of inventory could give further legs to this particular counter.