MOSL: Morning India (27/September/17)-1. India Strategy (Nifty reconstitution, Marginal FY19E EPS downgrade); 2. Media (GST/demon impact waning)

​MOrning India (27/September/17): 1. India Strategy (Nifty reconstitution, Marginal FY19E EPS downgrade); 2. Media (GST/demon impact waning)

Today’s top research theme

• ​India Strategy: Nifty reconstitution, Marginal FY19E EPS downgrade; Weight of Private Financials to increase; PSU Banks to hit new low
  
• The NSE Nifty-50 composition is all set for a reshuffle on Friday, 29th September 2017. Key observations:
  
• Bajaj Finance will be included in the benchmark with 1% weight, taking NBFC’s weight to 9.5% (+90bp).
  
• HPCL will enter with 0.9% weight, helping Oil & Gas to cement its position in the benchmark. This is first time in the history of the benchmark when all three OMCs will be part of the index. UPL will enter the index with 0.8% weight.
  
• With the exit of Bank of Baroda (weight: 0.4%), PSU Banks’ weight will be at an all-time low of 2.5%. Other losers include Utilities (-40bp), Cement (-40bp), Automobile (-40bp) and Private Banks (-30bp).
  
• Aggregate weight of the existing 47 Nifty-50 stocks will decline by 120bp. Top-5 stocks to be most impacted (in terms of weight) by the reshuffle: HDFC Bank (-12bp), HDFC (-9bp), Reliance Ind (-9 bp), ITC (-8bp) and ICICI Bank (-6bp).
  
• Post this reshuffle, BFSI will have an index weight of 35.8% (+30bp), almost equivalent to the combined weights of Oil, Technology and Auto.
  
• Nifty EPS for FY18 will see marginal upgrade of 0.2%. It will, however, see a downgrade of 0.4% for FY19, primarily due to a higher increase in free float market cap of 1.6% compared to a rise of 1.8%/1.1% in free float PAT for FY18/FY19.