Falling rupee helps Infy; RIL shares drop 31% since Jan

IT bellwether stock Infosys Industries has replaced Reliance Industries as the number one stock in the BSE Sensex and the NSE Nifty in terms of weightage.

The Infosys stock now commands a weight of 10.24 per cent as against Reliance Industries' 10.07 per cent in the BSE Sensex, after Monday's steep fall. On the NSE, where it gained the crown a couple of days back (December 9), Infosys commands a weightage of 9.13 per cent against Reliance Industries' 8.48 per cent.

The stock weights are automatically adjusted on a daily basis by the exchanges depending on free-float market capitalisation (non-promoter holdings) stocks in a company. Market-cap is calculated by multiplying the number of outstanding shares with the share price.

Infosys Technologies' free-float market-cap stood at Rs 1.33-lakh crore as against Reliance Industries' Rs 1.31-lakh crore.

Reliance Industries, which gained the highest weight in Nifty in December 2006 and replaced ONGC, has tumbled 31 per cent since January 1. During the same period, the stock of Infosys fell 21 per cent, while the BSE Sensex and Nifty slipped 18.65 per cent and 19 per cent, respectively.

The above shuffle also means that exchange-traded funds based on Nifty or Sensex will allocate more funds to Infosys than to Reliance, as these funds invest based on the weights that the Sensex and Nifty award to individual stocks. The asset base of seven Nifty ETFs hovers around Rs 760 crore.

Fundamental concerns

In recent times, the stock of Reliance Industries has been facing selling pressure due to fundamental concerns over refining margins and lower production, besides lingering uncertainties over production-sharing contracts.

The stock tumbled 3.65 per cent, or Rs 27.55, to Rs 727.90 on Monday. The 52-week range for the stock is Rs 1,090-713.55.

According to Mr Jagannatham Thunuguntla of SMC Global, “Of late, the company is losing the original tag of being the darling of the Indian capital market. Somehow, Reliance Industries has failed to generate the confidence by announcing market-moving projects.” It also could not effectively convince investors about the effective usage of its Rs 85,000-crore cash balance, he added.

Rupee drop helps

On the other hand, depreciation of the rupee seemed to have helped the Infosys stock. The rupee has fallen more than 17 per cent this year against the dollar. The Infosys stock on Monday gained 0.93 per cent to Rs 2,731.25.

The NSE has been computing Nifty weights using free-float market capitalisation since June 26, 2009, while the BSE adopted this on September 1, 2003


(This article was published on December 12, 2011)
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