MUMBAI: The BSE has decided to take two Anil Dhirubhai Ambani Group stocks-Reliance Infrastructure and Reliance Communications (RCOM)-out of the elite sensex index, which analysts say could lead to a selling pressure on the two stocks. In a late evening development on Friday, the BSE's index maintenance committee simultaneously replaced these two ADAG group scrips on the sensex with Coal India and Sun Pharma.
While Coal India is the most valued PSU and the second most valued company in India with a market capitalization of Rs 2.5 lakh crore, Sun Pharma, with a market cap of nearly Rs 50,000 crore is the most valued pharma company now. The changes are effective August 8, a BSE release said. The exclusion of R-Infra and RCOM is sure to add pressure on these stocks, since fund managers who have benchmarked their funds, including passive sensex-based exchange traded funds, will now be forced to sell these stocks and buy the two scrips which have now been included in the index.
Lately the RCOM stock has been under tremendous selling pressure as it failed to meet the growing challenges in the telecom space with its peers competing fiercely on tariffs, customer service and also acquisition of new clients. The company in particular and the ADA group in general faced another setback when the government agencies investigating the 2G telecom spectrum scam arrested three of its top executives and grilled the group's chairman Anil Ambani. Over the last one year, while RCOM has lost nearly 50% of its value to Rs 95 on the BSE now, R-Infra too lost over 50% to its current level of Rs 580.
RCOM was included in the BSE sensex in June 2006, within months of it being listed on the BSE after the company was demerged from Reliance Industries. It had then replaced Tata Power. Data on the BSE website does not show when R-Infra was included in the elite 30 stocks. The inclusion of Coal India was expected since its blockbuster IPO last November. However, BSE's rules for inclusion in the sensex, among others, required a continuous trading history of six months.
For Sun Pharma, this is the second entry into the sensex, but on both the occasions the same has been dramatic. The stock was first included in the index in January 2009 when it replaced Satyam Computer, soon after the accounting fraud in the software major was revealed. And this time, it is replacing RCOM, which was one of the most talked about stocks on Dalal Street just a few years ago.
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While Coal India is the most valued PSU and the second most valued company in India with a market capitalization of Rs 2.5 lakh crore, Sun Pharma, with a market cap of nearly Rs 50,000 crore is the most valued pharma company now. The changes are effective August 8, a BSE release said. The exclusion of R-Infra and RCOM is sure to add pressure on these stocks, since fund managers who have benchmarked their funds, including passive sensex-based exchange traded funds, will now be forced to sell these stocks and buy the two scrips which have now been included in the index.
Lately the RCOM stock has been under tremendous selling pressure as it failed to meet the growing challenges in the telecom space with its peers competing fiercely on tariffs, customer service and also acquisition of new clients. The company in particular and the ADA group in general faced another setback when the government agencies investigating the 2G telecom spectrum scam arrested three of its top executives and grilled the group's chairman Anil Ambani. Over the last one year, while RCOM has lost nearly 50% of its value to Rs 95 on the BSE now, R-Infra too lost over 50% to its current level of Rs 580.
RCOM was included in the BSE sensex in June 2006, within months of it being listed on the BSE after the company was demerged from Reliance Industries. It had then replaced Tata Power. Data on the BSE website does not show when R-Infra was included in the elite 30 stocks. The inclusion of Coal India was expected since its blockbuster IPO last November. However, BSE's rules for inclusion in the sensex, among others, required a continuous trading history of six months.
For Sun Pharma, this is the second entry into the sensex, but on both the occasions the same has been dramatic. The stock was first included in the index in January 2009 when it replaced Satyam Computer, soon after the accounting fraud in the software major was revealed. And this time, it is replacing RCOM, which was one of the most talked about stocks on Dalal Street just a few years ago.
toi
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