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

The Economic Times - - Smart - Mar­ket In­tel­li­gence

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.

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