In a major rejig, domestic auto giant Tata motors is set to replace the pharma company Dr Reddy’s Laboratories in the 30 shares index of BSE. Asia Index Private Limited, which is responsible for the reconstitution announced that the changes will be effective from December 19th, 2022.
The move could lead to buying of $150 million in Tata Motors by passive funds tracking the Sensex. On the other hand, Dr Reddy’s is likely to see outflows of $113 million, as per IIFL Alternative Research.
After the rejig, Sun Pharma will be the only healthcare stock in the Sensex. Meanwhile, Tata Motors will become the third auto stock in the index after Mahindra & Mahindra and Maruti Suzuki.
This will also make Tata Motors the fourth company from the Tata group after Tata Consultancy Services Ltd, Tata Steel Ltd, and Titan Company Ltd to be a part of the index.
On Monday afternoon, the shares of Tata Motors Limited were trading at Rs 423 levels while the shares shed 1.3 per cent to trade at Rs 4,349 levels.
The 30-share index includes some of India’s most valuable companies. The index was formed on January 1st, 1986. The constituents are periodically reviewed and adjustments are made Semiannually in the months of June and December. It is based on a float-adjusted market-cap-weighted methodology.
In addition to this, changes in other indices will also be made effective from the same date. Adani Total Gas and Hindustan Petroleum Corporation will be replaced by the stocks of Adani Power and Indian Hotels Company in the S&P BSE 100 index and Sensex Next 50 indices.
Written by Anoushka Roy
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