Yes Bank may get replaced by Shree Cement or Dabur India in the Nifty Index

According to the Nifty Index inclusion criteria, the stock should be a part of the F&O segment.

Shree Cement or Dabur India may replace Yes Bank in the Nifty Index, according to the latest Edelweiss report. It is expected that Index changes will be announced by second half of February 2020, and the same would take effect on March 27, 2020 (adjustment on March 26, 2020).

According to a note written by Edelweiss Securities, “Currently, both the highest float market capitalisation non-Nifty companies SBI Life and HDFC Life are not part of the F&O segment. Assuming neither SBI Life and HDFC Life are included in the F&O segment nor the Nifty Inclusion eligibility criteria are revised, then the next best candidate that fits the bill for inclusion in the Nifty is either Shree Cement or Dabur (replacing Yes Bank).” According to the Nifty Index inclusion criteria, the stock should be a part of the F&O segment.

There are multiple criteria like liquidity, trading frequency and float adjusted market cap, among others, for a stock to be included in the index. The full market capitalisation of Shree Cement and Dabur India as on Monday stood at Rs 76,002 crore and Rs 79,164 crore, respectively, on NSE. The brokerage also added that there are chances that Shree Cement could take the lead over Dabur.

“For the purpose of analysis, actual data until 31st January, 2020 will be taken into account. So, if we extrapolate the market capitalisation of Shree Cement and Dabur India, considering their current market capitalisation as static for the next 20 working days, Shree Cement takes the lead over Dabur,” the brokerage said.

It also added that the 6-month average float market capitalisation of Shree Cement and Dabur had a difference of only 32 bps (basis points) till January 3, 2020.