This IT stock may make a comeback in Sensex

29 Sep , 2021 By : Kanchan Joshi

For the first time, the brokerage firm Edelweiss' research team has analyzed the possible rejig or rebalancing in the benchmark S&P BSE Sensex. As per its analysis, information technology (IT) stock which is not part of the BSE-30 stock index has a good chance to replace Bajaj Auto in the index.

The inclusion, if happens, may lead to Wipro witness inflows of $151 million, whereas two and three-wheeler manufacturer Bajaj Auto may see around $75 outflows, due to the weight reduction. The BSE is expected to review and rejig the Sensex index in December for which the cut-off date is 29 October and announcement is expected in November.

After Global Index MSCI, even domestic benchmark Sensex can witness rise in weightage of the Technology sector, the note by Edelweiss Alternative Research stated.

The MSCI Standard Index for India is likely to include six stocks in November, majority of which include technology companies. Mphasis, Mindtree Ltd, IRCTC Ltd, Zomato Ltd and Godrej Properties Ltd are likely to join the index as part of the review. The index review is likely to be completed by the last week of October and the changes may take effect in November.

If all the stocks make the cut in the MSCI index, then cumulatively, they will see inflow of more than $1 billion, predicts Edelweiss.

“Interestingly, with promising line ups for digital/new economy IPOs, we at Edelweiss Alternative Research believe that the weight of technology sector will continue to rise as most of these prominent names can make early inclusion in MSCI Standard Index," Edelweiss stated.

After the listing of digital initial public offerings (IPOs) and once the lock in period for pre IPO investors come to an end all the newly added names in Index from upcoming listings will see higher free float which will simultaneously lead to increase in the weightages of those stocks in the Index, the note added.