Moneycontrol
Last Updated : Jul 09, 2018 01:24 PM IST | Source: Moneycontrol.com

Britannia most likely to replace HPCL in Nifty50

ICICI Securities said either of JSW Steel or Godrej Consumer Products may also be included in the Nifty in place of Lupin.

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ICICI Securities

Due to the recent guidelines given by NSE for the stocks inclusion/exclusion criteria from the Nifty, we have filtered the stocks, which are fulfilling the criteria for inclusion in the Nifty at current market price. These stocks are likely to be included in the Nifty from the October series.

Looking at the trend of the last few years, the exchange may come out with its list of inclusions and exclusions in the second half of August 2018.

Not more than 10 percent stocks can be replaced in a calendar year. The October series review would be the second and last change for the current year.

In the last review, three changes were made in the Nifty. Thus, we can expect two more changes in the Nifty.

As per prevailing market prices, Britannia is most likely to replace HPCL from Nifty 50 stocks.

Other probable changes: JSW Steel or Godrej Consumer may also replace Lupin.

Either of JSW Steel or Godrej Consumer Products may also be included in the Nifty in place of Lupin.

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The CNX Nifty is a well diversified 50 stock index accounting for various sectors of the economy. The index is reviewed every six months (on a half-yearly basis) while a four week notice is given to the market before making changes to the index set.

As per guidelines, a stock may be replaced from an index for the following reasons:
1: In case of compulsory changes like corporate actions, delisting, etc. In such a scenario, the stock having largest free float market capitalisation and satisfying other requirements related to liquidity, turnover and free float will be considered for inclusion;

2: When a better candidate is available in the replacement pool, which can replace the index stock i.e. stock to be included in the Nifty should have at least 1.5 times the market capitalisation of the stock that is to be excluded.

However, with respect to point 2, the following should also be considered:
A: A maximum of 10 percent of the index size (number of stocks in the index) may be changed in a calendar year. Hence in calendar year 2018, a maximum of five stocks can be replaced from the pool of 50;

B) The next rebalancing is expected to be effective from October series 2018. Hence, an announcement regarding the same is likely to be made in the second or third week of August.

Disclaimer: The views expressed by brokerage house on moneycontrol.com is its own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Jul 9, 2018 01:21 pm
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