Infosys has replaced Reliance Industries as the number two stock in the BSE Sensex in terms of weightage.

The Infosys stock now commands a weight of 9.05 per cent in the BSE Sensex displacing Reliance Industries to number three at 8.69 per cent. However, ITC continues to dominate the index, with a 10.74 per cent weightage.

Market cap rises

Since the return of Narayana Murthy in June, market capitalisation of the company rose from Rs 1.38 lakh crore to Rs 1.9 lakh crore.

In the S&P Nifty, Infosys took the top slot from Reliance in July.

On Monday, the shares of Infosys ended 1.52 per cent higher at Rs 3,323.50, while RIL was up 0.84 per cent at Rs 870.25, on the BSE.

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 1.62 lakh crore as against Reliance’s Rs 1.55 lakh crore.

Murthy effect?

Infosys has been able to beat Street expectations following the return of Narayana Murthy. Most brokerages have retained or recommended a buy call on the stock with higher price targets.

According to Motilal Oswal, “This was the third quarter in the last four when Infosys surprised positively on revenue. Also, deal signings remain healthy, which will flow to revenue more significantly in FY15E, driving our outlook of sanguine growth next year. Infosys also enjoys multiple levers to be able to grow its margins.”

Boz Hristov, Research Analyst, Technology Business Research Inc, said, Murthy’s vision is “well-received” by stakeholders as it will help the company ignite sustained growth in its Business IT Services unit, which historically has been the primary revenue contributor (61.4 per cent). “We expect Infosys’ top-level leadership and sales matrix to remain in flux over the next quarters, as the firm develops a road map that will support Murthy’s efforts to build a successful, sustained change in strategy,” Hristov added.

The BSE has been computing weights using free-float market capitalisation since September 1, 2003.

Reliance Industries, which gained the highest weight in the Nifty in December 2006, lost its numero uno status gradually since 2011.

(This article was published on October 14, 2013)
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