Adjustment Day: Fine 'rebalancing' act for Nifty indices on Wednesday

Several stocks on the Nifty indices could see a churn on Wednesday - the adjustment day for the quarterly recapping. The biggest rejig in terms of change in weighting will happen to the Nifty CPSE (Central Public Sector Enterprise) Index, where Oil and Natural Gas Corporation’s (ONGC’s) weighting on the index will increase 320 basis points (bps) and that of NTPC’s and Power Grid Corporation of India’s (PowerGrid’s) will reduce by 152 bps and 87 bps, respectively.

According to calculations done by Abhilash Pagaria of Edelweiss Alternative & Quantitative Research, ONGC will see inflows of $77 million, while NTPC and PowerGrid will see outflows of $36 million and $31 million, respectively.

Coal India, Bharat Electronics, and NMDC (formerly National Mineral Development Corporation) are the other stocks that will see their weighting go down on the CPSE index - a gauge formed to help the government with its disinvestment drive.

The quarterly recapping of Nifty indices takes into account the changes in free-float market capitalisation (m-cap) of companies and realigns their weighting. The free-float m-cap of a company can change due to corporate activity such as buybacks, promoter stake-sale, or issuance of new shares.

On the Bank Nifty Index, Axis Bank and State Bank of India (SBI) will see their weighting increase 104 bps and 30 bps, respectively, and as a result, will see inflows of $43 million and $12 million, respectively.

HDFC Bank, ICICI Bank, and Kotak Bank will see their weighting decrease 79 bps, 68 bps, and 34 bps, respectively, and as a result, see outflows of $32 million, $28 million, and $14 million respectively, according to Edelweiss.

The benchmark Nifty50 Index will also see change in weighting of its eight components. ONGC, Bharti Airtel, Cipla, and SBI Life will see an increase in weighting between 5 bps and 1 bps. Reliance Industries, Infosys, UPL, and Tata Consultancy Services will see a slight reduction between 1 bps and 2 bps.