The semi-annual review of the Nifty throws up the possibility of inclusion of Tata Consumer and exclusion of GAIL from the benchmark index, a report by Edelweiss Alternative Research stated.
Edelweiss expects index changes to be announced by the second half of February 2021, and the same should take effect on March 26, 2021. The index is reviewed every six months and a four-week notice is given to the market before making changes to the index set.
The inclusion of Tata Consumer in the index would attract $88.7 million worth of inflows to the company, noted the report. However, it added that GAIL's exclusion may lead to outflows worth $56.7 million from the firm.
It also stated that after the changes, the weightage of Tata Consumer is likely to be increased by 0.59 percent and that of GAIL could be reduced by 0.38 percent.
According to the Nifty index inclusion criteria, the stock should be a part of the F&O segment. Currently, the highest float market capitalization non-Nifty company is D-Mart, however, the stock doesn’t fulfill the criteria for F&O inclusion, the brokerage report further explained.
"The analysis is done as per the set of information available till December 22, 2020, considering the criteria set by the exchange for the Index constituents’ inclusion/exclusion. Any significant changes in market capitalization of companies or modification in exchange criteria may change the expectations," the brokerage observed.
In the previous semi-annual review of the Nifty50 index in August, the exchange had included Divi's Laboratories and SBI Life Insurance in the Nifty and excluded Bharti Infratel and Zee. These changes were made effective on September 25.