HDFC, ICICI Bank Gain; HLL, SBI Lose Weight In New Sensex

Mumbai, Aug 29: | Updated: Aug 30 2003, 05:30am hrs
With the countrys most popular index, the 30-share Sensex of The Stock Exchange, Mumbai (BSE), taking on a global look by turning free-float adjusted from Monday, the market is expected to witness substantial activity in Sensex stocks.

The churning is expected to be undertaken by fund managers who have Sensex- linked schemes or foreign funds who invest as per the weightage of stocks in the Sensex.

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Among the stocks whose weights will gain substantially in the Sensex (free float form) from Monday inlcude HDFC Ltd, with the weightage of the housing finance major slated to go higher by 53.69 per cent to 5.21 per cent in the free float Sensex as compared to its weightage of 3.39 per cent in Sensex as on Friday.

Private bank major ICICI Bank will be second in the list with its weightage jumping by 53.31 per cent to 4.81 per cent in the free float form as compared to its existing weight of 3.17 per cent. In both these companies, the entire 100 per cent holding will be in free float form.

Among the other gainers are Larsen & Toubro, with a new weightage of 2.86 per cent, up 38.16 per cent to its existing weight of 2.07 per cent. Software major Infosys will also have a upper hand in the new Sensex: the weightage of Infosys will climb up to 9.15 per cent or a jump of 22.82 per cent to its existing weight of 7.45 per cent.

Among the losers, fast moving consumer goods (FMCG) giant Hindustan Lever Ltd (HLL) will be the biggest loser with its weightage in the Sensex falling to a single digit number to 8.96 per cent, or a drop of 23.29 per cent in its weightage from the existing 11.68 per cent as on Friday. Anglo Dutch Company Unilever Plc holds just over 51 per cent in HLL.

Commercial bank major State Bank of India (SBI) will be the second biggest loser among the heavyweights with its weight in the free float falling to 5.10 per cent, a drop of 23.31 per cent to its existing weight of 6.65 per cent.

Petrochemical major Reliances weight will come down to 14.74 per cent, a drop of 7.93 per cent as against is current weight of 16.01 per cent. However, despite a fall in the weightage, Reliance will continue to be at number one position in the Sensex post free float.

Said Sanjay Sinha, fund manager, UTI MF: The new free float will be a better representation of the market. The new Sensex will be reflecting the actual floating stock as the measure of market capitalisation and it will also dilute the distortion created by some stocks having very high weight in the Sensex.

Currently, there are about six index-dedicated and one exchange traded fund (ETF) dedicated to the 30-share Sensex. The total corpus of all these seven schemes linked to the Sensex is about Rs 350 crore, with UTIs Sensex linked scheme having a share of about 57 per cent share at Rs 200 crore.

The free-float methodology refers to an index construction methodology that takes into consideration only the free-float market capitalisation of a company for the purpose of index calculation and for assigning weight to stocks in Index. Free-float market capitalisation is defined as that proportion of total shares issued by the company that are readily available for trading in the market.