Edelweiss Alternative Research has done a pre-emptive analysis of the K Half Yearly Index Regressing nifty index Which will be officially announced in the second half of February 2022. The brokerage house’s analysis includes the impact of flows in the inclusion and exclusion of all indices, followed by passive funds, namely- Nifty 50, Nifty Bank, Nifty IT and Nifty Next 50. ,
The Edelweiss research team believes that Indian Oil Corporation (IOCL) has a good chance of exiting the Nifty index, while the stock that exits IOCL could be Apollo Hospitals or Info Edge (Naukri).
“As per our calculations, we believe that APHS has slightly higher potential than Info Edge. At present, both the stocks are 1.5 times the free float market cap of IndianOil,” the brokerage said.
Incorporating Apollo Hospitals could see inflows of $175 million, while Info Edge could potentially see inflows of $144. Meanwhile, according to Edelweiss estimates, the exclusion of IndianOil would result in an outflow of $100 million.
However, a significant price hike in the next three weeks, which if sustained till the cut-off date, which is January 31, 2022, could save IOCL from exclusion. Similarly, the two potential names should also hold the present value with limited downside till the cut-off date.
The most important criterion for Nifty inclusion is that the stock should compulsorily be a part of the derivatives segment.
“The Average Free Float Market Cap of Avenue Supermart (DMART) is much higher than the current constituents, but for the last few reviews the stock is still not featured in the Nifty 50 Index as it is not a part of the F&O segment. If the stock gets into derivatives by the date of announcement, it will definitely be a Nifty 50 member,” Edelweiss note added.
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