Managers of BSE’s Sensex are reversing a portfolio decision they made 15 years ago. Back in November 2003, HCL Technologies Ltd was excluded from the index and replaced by Wipro Ltd. The positions are now being swapped, with Wipro getting the boot, and HCL Tech being welcomed into the index of 30 large-cap stocks.

How has the long Wipro short HCL Tech position done in the past 15 years? Terribly, considering that HCL Tech shares have rallied by 17 times during this period, while those of Wipro have risen only four times. Even without considering a short position on HCL Tech, a decision to buy Wipro would have resulted in huge losses on a relative basis.

This column has pointed out earlier that stocks that are discarded from Sensex and Nifty deliver far greater returns compared to those that are added to the index. That’s because managers of these indices follow a so-called momentum style of investing, where stocks that have done well in the recent past are included in the index, while laggards are dropped. As a result, the additions are coming in at relatively higher valuations, while the discards may well be good value picks.

Undoubtedly, this contrarian investment strategy would have resulted in huge gains, in the case of a long HCL Tech short Wipro position 15 years ago. By that logic, does it make sense to now buy Wipro and sell HCL Tech? Hardly anyone is betting on that—Wipro continues to struggle for growth, and brokerage firms such as Kotak and Nomura continue to prefer HCL Tech over Wipro even now. But given how the above-mentioned contrarian indicator has done in the past, who knows what lies ahead in the next 15 years.