As per the IDBI Capital report written by AK Prabhakar with co-author being Dhartikumar Sahu, some of these stocks including the likes of Zee Entertainment, GAIL India, and Bharti Infratel could be excluded from the Nifty50 in the next index rejig. And in their place the stock that could find place are Divi's Lab, Dabur India and SBI Life.
The indices are rejigged bi-annually in a year on the basis of data as on January 31 and July 31.
For the listing of a new stock, data of a 3-month period is considered instead of the sixth-months. As per the report, the Nifty indices are calculated with the help of a float-adjusted weighted market capitalisation methodology, which takes into account the constituent changes in the index and corporate actions such as stock splits, rights issuance, etc., without affecting the index value.
The stocks being considered or suggested here have lost in stock price all through in the calendar year. At the same time, Divi's Lab have posted a return of 39% while Dabur has been giving gains of 7.3% on a year to date basis. Also during the same time, Nifty has posted a loss of 9%.
"At the time of index reconstitution, a company which has undergone a scheme of arrangement for corporate events such as spin-off, capital restructuring etc. would be considered eligible for inclusion in the index if as on the cut-off date for sourcing data of preceding six months for index reconstitution, a company has completed three calendar months of the trading period after the stock has traded on ex. basis subject to fulfillment of all eligibility criteria for inclusion in the index," Prabhakar and Sahu wrote.
As per the norms, the stock to be added should be fulfilling the impact cost criteria and its free-float market capitalisation should be 1.5x of the free-float market capitalisation of the smallest constituent in Nifty50.