Mutual funds will need to realign investments worth Rs 16,000 crore following the move by the National Stock Exchange (NSE) to switch to free-float capitalisation method for calculating the weightages of companies in the S&P CNX Nifty, effective June 26.
Actively managed equity funds worth Rs 16,000 crore and index funds worth Rs 600 crore are benchmarked to the 50-share S&P CNX Nifty, said sources. The NSE, at present, uses the full-market capitalisation method for reaching relative weightages of constituent stocks in Nifty.
Foreign institutional investors (FIIs), however, will not need to churn their India portfolios much as most of their funds are benchmarked to the MSCI Index, which is calculated on the basis of free-float method.
?There could be slight realignment on the part of actively managed equity funds benchmarked to the Nifty around June 26. All index funds benchmarked to Nifty will have to alter their portfolios in line with the new weightage,? said Aneesh Srivastava, CIO, IDBI Fortis Life Insurance.
Similar views were expressed by Nitesh Jain, associate, quantitative research team, at Antique Stock Broking.
?The index-based positions will have to be adjusted for all the stocks, based on the new weightages. The position of stocks for which the weightage has come down will have to be reduced,” he said.
According to the new weightage, sectors like utilities, oil and gas and telecom will be the major losers, while banks, staples and software will benefit. Out of the 50 stocks on the NSE, 24 stocks will gain weight, while the rest will lose weight.
State-owned NTPC, ONGC and Power Grid Corporation and telecom major Bharati Airtel will be among the biggest losers, while Infosys, ITC, ICICI Bank, HDFC Bank and HDFC will gain the most from the shift.
