JSW Steel, which is set to join Sensex due to exclusion of Housing Development Finance Corporation Ltd (HDFC), could attract $145 million in passive inflows, as per estimates by Nuvama Institutional Equities. The adjustment will take place on July 12 and would be effective from July 13.
"I believe most of the index balancing pre-emptive positioning is well priced in," said Abhilash Pagaria of Nuvama Institutional Equities.
HDFC will delist from stock exchanges on July 12 due to its all-stock reverse merger deal with HDFC Bank. The merger with HDFC Bank Ltd got effective from July 1. Termed as the biggest transaction in India's corporate history, HDFC Bank on April 4 last year agreed to take over the biggest domestic mortgage lender, creating a financial services titan.
This led to stock exchanges announcing several changes to indices where HDFC was a constituent.
For example, LTIMindtree has replaced HDFC in Nifty. This stock is likely to see $125-130 million in net inflows on Nifty inclusion. As per Nuvama estimates, LTIMindtree will see passive inflow of appx $172 million due to Nifty entry. That said, LTIMindtree will also see about $50 million in outflows due to adjustment in Nifty Next 50. The net inflow should be somewhere around $125 million to $130 million, said Pagaria of Nuvama Institutional Equities said.
Meanwhile, Jindal Steel & Power will replace LTIMindtree in the Nifty Next 50 as the latter migrates to the Nifty club. This stock is expected to see $30 million in inflows.
Meanwhile, Mankind Pharma, which got listed on the stock exchanges in May, will replace HDFC Ltd in Nifty500 index on July 13, NSE said. LIC Housing Finance will replace HDFC Ltd in Nifty Financial Services Index. Mankind Pharma has also been included in Nifty Midcap150, Nifty Midcap100, Nifty200, and other indices. Zydus Lifesciences will replace Jindal Steel & Power in Nifty Midcap Select. Adani Group's Ambuja Cements Ltd will replace HDFC in Nifty High Beta50 index.
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