SENSEX LOGS BIGGEST SINGLE-DAY JUMP IN A MONTH

Wipro or Tata Steel are likely to dislodge state-owned Oil and Natural Gas Corporation (ONGC) in the benchmark Sensex, according to an analysis done by Brian Freitas, an independent analyst publishing on Smartkarma.

The 30-share bluechip index is rebalanced on a semi-annual basis with next rejig slated for June 18. However, changes to the index are announced a month in advance.

“We see Oil & Natural Gas Corp (ONGC IN) as a high probability deletion, while Wipro (WPRO IN) holds the edge over Tata Steel (TATA IN) as an index inclusion,” Freitas wrote in a note.

Six-month average free-float market capitalisation (m-cap) is a key parameter to determine addition or deletion of stocks.

Wipro’s average free float mcap stood at ~60,719 crore, while Tata Steel’s was ~48,287 crore.

HDFC Standard Life Insurance’s free-float m-cap is more than that of Tata Steel at ~53,000 crore. However, given the high weight of financials in Sensex, it may not make the cut.

ONGC has the lowest average free-float m-cap for the past six months at ~34,894 crore, followed by Bajaj Auto (~46,215 crore) and NTPC (~48,220 crore).

Changes to the Sensex impact ETFS tracking the index. According to the note, ETFS with assets worth nearly $7.9 billion are indexed to the Sensex, the largest being SBI ETF Sensex with assets worth $5.6 billion.

In December, Dr. Reddy’s had replaced Tata Steel, but shares of the steel maker have rallied more than 50 per cent, which has “put it back into contention for index entry”, says Freitas.