The 30-share bluechip index is rebalanced on a semi-annual basis with next rejig slated for June 18.
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 m-cap stood at Rs 60,719 crore, while Tata Steel’s was Rs 48,287 crore.
HDFC Standard Life Insurance’s free-float m-cap is more than that of Tata Steel at Rs 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 Rs 34,894 crore, followed by Bajaj Auto (Rs 46,215 crore) and NTPC (Rs 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.
Photograph: Danish Siddiqui/Reuters
