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Reality check in revamp of NSE indices

Mumbai, Sept. 17: The National Stock Exchange (NSE) today shuffled 50 share-CNX S&P nifty to help its key stock gauge reflect market trends more accurately.

The 50-share index would soon include software services provider HCL Technologies, refiner Bharat Petroleum Corporation (BPCL) and Shipping Corporation of India. They will replace Asian Paints, Proctor & Gamble Hygiene Healthcare (P&G) and Reliance Petroleum. Other broader indices have also been shuffled.

HCL Technologies and BPCL would be included in the nifty from October 28, while SCI will be taken in the day Reliance Petroleum’s merger with Reliance Industries is closed.

Market watchers believe the changes will produce an index that is more vibrant and catches the mood better.

Of late, many index funds tracking the BSE sensex and nifty have come up, which purchase shares in proportion to their weightage in an index. Investors prefer funds that track the sensex. To that extent, it will make them think of putting money in funds tied to nifty.

The sensex and nifty went different ways on September 9 — after the Cabinet meeting on disinvestment put off the sale of HPCL and BPCL. While the sensex plunged in tune with investor angst, Nifty actually ended a shade higher over its previous close.

Dealers said this happened because the Wipro stock that comprises one of the fifty stocks in Nifty flared up even as PSU stocks were hammered. The decision to usher in BPCL and Shipping Corporation will lend additional weight to old-economy stocks in NSE’s key barometer.

Reliance Petroleum’s merger with Reliance Industries, which is already part of the index, will ensure volatility continues to be reflected in the revised marker. No reason for dropping Asian Paints and Proctor & Gamble Hygiene Healthcare was given, but analysts said it was because they had less floating stock and thinner daily volumes than the stocks which will come in.

BSE settlement

In an effort to woo investors and institutions back to its fold, the Bombay Stock Exchange (BSE) has decided that payment and delivery of securities within its system will be made within one working day. The move is seen as a pro-active bid to revitalise a dormant cash market.

“The measure will benefit investors and add to the overall efficiency in using funds and securities” BSE said.

Some market watchers feel it is BSE’s response to the NSE’s phenomenal progress in the derivative segment. BSE, the older of the two, has to ensure that its cash segment remains vibrant, and it might try to make the cash segment its niche business, experts said.

At a time when stock markets are in a bear hug, the move is designed to court institutional players, especially foreign investors, to use BSE for their cash deals.

Meanwhile, the survival of Calcutta Stock Exchange is at stake following abnormal delay in the Securities and Exchange Board of India’s (Sebi) decision on waiver of interest charges on turnover tax (ToT), exchange brokers said today.

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