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August 4, 2001
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Money > Business Headlines > Report August 4, 2001 |
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NSE may junk HCL Info from Nifty over low m-capMobis Philipose HCL Infosystems, one of the most recent inclusions in the S&P CNX Nifty index, may soon find itself out as it fails a key criteria for continued inclusion in the 50-scrip index. The NSE's index maintenance sub-committee will meet next week for the quarterly review of its indices. HCL Infosystems trips on the criteria, which stipulates an average market capitalisation of Rs 5 billion in the last six months prior to the date of review. Arup Mukherjee, CEO of India Index Services & Products, the company which owns the S&P CNX Nifty brand, declined to comment on the probable exclusion of HCL Infosystems, but confirmed that the two criteria for selecting scrips include an average market cap of Rs 5 billion and an impact cost of less than 1.5 per cent for stocks traded on 85 per cent of the trading days. "While selecting stocks which meet impact cost criteria, care is also taken to ensure that as much market cap as possible is captured by the 50 stocks in the index," he said. HCL Infosystems was included in the Nifty only last May, when it commanded a market cap of over Rs 10 billion. However, the company has been among the worst hit in the tech meltdown, losing over 80 per cent of its market value till date. Consequently, the company's market cap is under Rs 2 billion, lower than even the qualifying criteria of a Rs 2.50 billion market cap for the Nifty Junior. The company's average market cap during the period from January 1, 2001 to June 29, 2001, though higher at Rs 4.34 billion (because the fall in prices was in the latter half of the period), fails to meet the Rs 5 billion yardstick. Another HCL group company, HCL Technologies, more than qualifies with an average market cap of Rs 110 billion during the same period. The liquidity criteria should not be a problem, what with the scrip being a regular feature among the top twenty traded scrips on the NSE. Another scrip that would be watched closely is Kochi Refineries, which would qualify based on the average market cap criteria, but it has slipped to below the Rs 5 billion yardstick. In light of the price meltdown in most stocks, NSE may well change its minimum market capitalisation criteria of Rs 5 billion for the Nifty and Rs 2.50 billion for the Nifty Junior. While only two stocks have slipped below the yardstick in the Nifty, as many as 11 companies have fallen below the Rs 2.50 billion mark in the Nifty Junior. Powered by YOU MAY ALSO WANT TO READ:
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