Sensex Rejig On Monday: BEL, Trent to Attract Over $700-mn Inflows; Nestle, IndusInd Bank to Exit

The rebalancing of the S&P BSE Sensex which is set to come into effect on Monday, June 23, will see the entry of Tata Group’s retail chain Trent and defence player Bharat Electronics into the 30-stock index. The two companies will be replacing fast moving consumer goods major Nestle India and lender IndusInd Bank.

The inclusion of Trent and BEL is expected to draw passive inflows worth a combined total of around $700-mn. Out of the two, Bharat Electronics is expected to rake in inflows to the tune of $378 million, around 2.8 times its average daily volume (ADV), calculations made by Nuvama Alternative Research showed.  On the other hand, shares of Trent are expected to enjoy flows of around passive inflows of $330 million, or 5.8 times its ADV.

The two stocks have also recorded contrasting performances in the past six months. While shares of BEL have delivered over 38% returns in the last six months, fuelled by the defence flavour coming back in action, those of Trent have shed 15% in the same tenure.

Moving on, the exclusive from the benchmark Sensex could trigger outflows of $230-mn out of Nestle India shares, equivalent to around 10.7 times its average daily volume (ADV), the Nuvama report estimated.

In addition, IndusInd Bank could also see outflows of $145 million, equivalent to about 1.9 times its ADV. The stock has already been under intense selling pressure in recent times, losing over 9% of its value in the last six months amid persisting concerns over corporate governance.

Other major changes in the Sensex rebalancing will include a slight weightage increase for cement maker Ultratech, expected to garner inflows of around $4-mn.

Meanwhile, index heavyweights such as HDFC Bank, Bharti Airtel, Reliance Industries, ICICI Bank, Infosys, Sun Pharma, L&T, and ITC are also set to see a minor weight reduction which is expected to cap passive outflows from these counters.