FREE

MOSL: Morning India (23/March/18): 1. India Strategy: Nifty reconstitution; 2. Economy | BRICS+: 1QCY18 Chart Book; 3. Aviation

MOrning India (23/March/18): 1. India Strategy: Nifty reconstitution; 2. Economy | BRICS+: 1QCY18 Chart Book; 3. Aviation

 

Today’s top research theme

India Strategy: Nifty reconstitution – Financials’ weight to inch up further; Healthcare weight to reduce to nine-year low

• The weight of Financials has seen a secular rise in the benchmark indices. Post the reshuffle, BFSI will have an index weight of 35.7% (+20bp from current level; +3x in 10 years). Notably, BFSI’s weight will be more than the combined weights of Oil, Technology and Auto.
• Bajaj Finserv will be included in the benchmark with 0.8% weight, taking NBFC’s weight to 10% – implying a 60bp increase from the current level and almost 50% rise from its weight in CY16 (6.6%).
• Grasim Industries will enter with a weight of 1.1% and Titan with 0.9%.
• With the exit of Aurobindo Pharma (weight: 0.4%), Healthcare’s weight would reduce to a nine-year low of 3.2%.
• Other sectors that would lose their weight in the benchmark are Automobile (-50bp), Private Banks (-40bp), Technology (-20bp) and Oil & Gas (-20bp).
• Aggregate weight of the existing 47 Nifty-50 stocks will decline by 150bp post the reshuffle.
• Nifty EPS for FY19 will see a marginal downgrade of 0.3%. It will be primarily due to a higher increase in free float market cap of 1.6% compared to a rise of 1.3%/1.4% in free float PAT for FY19/FY20.

Piping hot news

Sebi to focus on big bang market reforms at board meeting

• Capital markets regulator Securities and Exchange Board of India (Sebi) will consider closely supervising the work of auditors, independent valuers and compliance secretaries and penalize them for lapses at its board meeting on 28 March. The Sebi board will also consider proposals such as making algorithmic trading cheaper and more accessible, and reducing fees charged by mutual funds to unit holders.