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MNCs lose ground in Sensex revamp

Our Bureau

Mumbai , Sept. 27

WITH multinational companies losing flavour of the stock market due to delisting of several companies and slowdown in FMCG sector, the Bombay Stock Exchange (BSE) index committee today decided to remove MNC stocks such as Nestle, Castrol, GlaxoSmithkline Pharma and Colgate Palmolive from the benchmark index, Sensex. It has also decided to remove HCL Technologies from the index.

The stocks that will replace them are Bharti Televentures, HDFC Bank, Oil and Natural Gas Corporation, Tata Power and Wipro.

The BSE in a notice informed its members that these changes would take effect from November 10.

The index committee's decision to make changes in the Sensex appears to be due to lack of market interest in the deleted MNC stocks. In addition, the floating stock of several of these companies has also come down due to the open offer and creeping acquisition by their parents. For instance, the holding in Castrol of its UK parent has increased from 51 per cent to 71 per cent. Similarly the holding of the Swiss multinational Nestle SA in Nestle India has increased from 51 per cent to 59.76 per cent. The BSE Sensex had moved to free-float recently and due to low floating stock the market capitalisation of these companies has come down.

The stocks of the companies added to the index have seen lot of market interest over the last few months. There has been interest of both the retail and institutional investors in these stocks.

The market capitalisations of these companies have more than doubled over the past six months. Brokers expect these stocks to firm up further in the coming weeks with several institutional investors following the Sensex to do their buy and sell decisions. Some selling may also be expected in the stocks that were removed from the benchmark index.

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