The capping factor of stocks in all the National Stock Exchange (NSE) Indices is realigned upon change in equity, investible weighted factor (replacement of scrips in the index, periodic rebalancing. The rejig on a quarterly basis takes place on the last trading day of March, June, September and December.
According to Edelweiss, there will be a buy inflow in stocks like SBI of around $104 million and Axis Bank to witness inflows worth $58 million in Nifty Bank. Whereas HDFC Bank, Bandhan Bank, Federal Bank, AU Bank, Punjab National Bank (PNB), IndusInd Bank are expected to witness outflows.
As far as CPSE Index is concerned, Power Grid will see an inflow of around $17 million, around $2 million in NHPC and $5 million NTPC. However, top outflow impact will be seen in ONGC close to $22 million, as per the report.
Meanwhile, in Nifty Index, the major weight change led inflow is in HDFC Life. JSW Steel, BPCL may also witness inflows due to weight increase. Though, Edelweiss expects Reliance Industries (RIL), Infosys and TCS to see weight reduction, which may lead to outflows.
Whereas, there will be one inclusion and exclusion Nifty IT Index and as per Edelweiss' predictions, the flows worth $16 million would be seen in LTTS (L&T Technology Services) whereas OFSS (Oracle Financial Services Software) will likely to see exclusion with a possibility of $20 million outflows.
The rebalance takes into account closing prices as on T-3 basis, where T day is last trading day of March, June, September and December. For this quarter, the changes shall become effective from September 30 and adjustment will take place on September 29. The rebalancing includes addition of a new stock to the index, or removing a particular stock. It also may lead to increasing or decreasing the weightage of existing stocks in the indices.
