The NSE Nifty 50 index will soon be up for its half-yearly shuffle, where state-owned natural gas transmission firm GAIL could exit the 50-stock benchmark. Replacing it could be yet another Tata Group company, Tata Consumer, according to brokerage and research firm ICICI Securities. The expected changes could come into force by March this year. GAIL’s free-float market capitalization currently stands at Rs 19,100 crore while that of Tata Consumer is at Rs 31,200 crore. GAIL shares have zoomed 49% in the last six months, while Tata Consumer stock has gained 46%.
Massive fund inflows on the cards
ICICI Securities estimates that the changes could result in Rs 760 crore worth of buying of Tata Consumer shares. On the other hand, it could also result in selling worth Rs 510 crore in GAIL shares. “GAIL currently has an estimated weight of 40bps in the index, while Tata Consumer is expected to enter the index with a weight of 60bps, entailing ETFs and index funds buying worth ~Rs7.6bn (Rs 760 crore). The asset under management of the index and Nifty 50 ETF stands at Rs 1.26 lakh crore.
Among Nifty 50 constituents, the number of industrial and commodity stocks continues to fall since the peak of the capex cycle in 2008 while consumption stocks continue to rise, the report said. Currently, Nifty 50 has assigned 11.52% weight to the consumer goods sector while oil & gas has a 12.49% weight, largely assigned to Reliance Industries. “ The higher presence of consumption (staples, discretionary, and auto) as a theme within the NIFTY50 is understated due to the presence of large consumer business within a large conglomerate,” analysts at ICICI Securities said.
Avenue Supermarts could trump Tata Consumer
Apart from Tata Consumer, Radhakishan Damani’s Avenue Supermarts also stands a chance to enter the Nifty 50 index but falls short only due to its non-inclusion in the futures & options segment. Avenue Supermarts has a free-float market capitalization of Rs 35,200 crore since July 2020. “However, if it does enter the F&O segment, it replaces Tata Consumer as the new entrant into the NIFTY 50 index in the March 2021 semiannual changes,” ICICI Securities said. Other stocks that are in the fray to enter the 50-stock index include ICICI Lombard and Info Edge. Adani Green is another stock that could enter the index but is yet to be included in the F&O segment.
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