ACC may Make Way for Bajaj Fin or UPL in Nifty
While IDBI Capital says Bajaj Finance could be the new entrant, IIFL feels UPL has the edge
Mumbai: ACC is likely to be excluded from the Nifty soon in the semiannual index review of the index by the NSE, said analysts. Bajaj Finance and UPL are probable candidates for taking ACC’s place in the index.
Analysts said the change might be announced this month and will be effective from October 1.
According to a note by brokerage IDBI Capital, there is higher probability of Bajaj Finance being included in the Nifty index.
“There are higher chances of Bajaj Finance being included. Although its market cap is slightly less than that of UPL, the impact cost at 0.4 is less than UPL’s 0.7. For inclusion, one of the criteria is that impact cost should be 0.5 or less,” said Dhartikumar Sahu, data analyst at IDBI Capital Markets and Services.
Impact cost is a measure of liquidity of a stock and reflects the costs faced when actually trading an index. Other criteria for inclusion in the index is that the company should have a listing history of six months. Only those companies that are allowed to trade in the futures and options segment are eligible to be a constituent of the index. The index is re-balanced on semi-annual basis and the ex- HIGHS & LOWS change gives four weeks before making any changes to the index. A lot of funds are benchmarked against these indices, which means any change in the index leads to a corresponding change in their portfolios.
Hemant Nahata, derivatives analyst at IIFL Private Wealth, said Bajaj Fi n a n c e, UPL a n d Bri t a n n i a Industries are the probable candidates for the one spot in Nifty based on the market capitalisation, if ACC is excluded. However, he believes UPL is more likely to make it to the index.
“UPL has a higher chance than Bajaj Finance as financial services already has a significant weightage on the index,” said Nahata.
If Bajaj Finance is included, then the weightage of financial services in the Nifty will go up to 33.1% from 32.5%.
Bajaj Finance has gained close to 53% in the last one year while UPL has gained 46.2% in the period.