HDFC merger effect: RIL, TCS, ICICI Bank may see weight adjustment in Nifty; many stocks to see inflows, outflows

Due to the merger of HDFC Bank and HDFC, JSW Steel will enter S&P BSE Sensex and LTIMindtree will enter the Nifty50 index which may also cause some weight addition and reduction in some of the index components. Due to this, there will be some inflow and outflow from the index components on Wednesday (July 12), said Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research.

Since HDFC will cease to be part of both Nifty50 and Sensex from July 13, Nifty50 will see the inclusion of LTIMindtree and Nifty Next 50 will see the entry of Jindal Steel after the exit of LTIMindtree from it. Sensex will see the addition of JSW Steel into it.

Read more: LTIMindtree to replace HDFC on Nifty 50 benchmark with effect from 13 July after HDFC Bank takeover

Read more: Index rejig: JSW Steel to replace HDFC in Sensex from July 13

As per Pagaria, a major flow impact will be seen in Nifty Bank as HDFC Bank will see an upward weight revision to 29 per cent from 27 per cent in the index.

"In the Nifty Bank index, weight addition will be seen in stocks such as HDFC Bank, IndusInd Bank, Bank of Baroda, AU Small Finance Bank, Federal Bank, IDFC First Bank, PNB and Bandhan Bank. Weight reduction will be seen in ICICI Bank, State Bank of India, Kotak Bank and Axis Bank," said Pagaria.

As per Pagaria, after the index rejig Reliance Industries, ICICI Bank, Infosys, ITC and TCS will see some weight down in the Nifty50 index.

In the Nifty50 index, the revised weight of HDFC Bank will be 14.43 per cent which will be the highest weight of any single constituent in the index, said Pagaria.

The weight up and weight down of the stocks will influence the inflow and outflow into them. HDFC Bank is expected to see an inflow of about $70 million while ICICI Bank may see an outflow of about $37 million, Pagaria said.

IndusInd Bank ($7 million), Bank of Baroda ($3 million), Au Small Finance Bank ($3 million), Federal Bank ($2 million), IDFC First Bank ($2 million), PNB ($1 million) and Bandhan Bank ($1 million) may see an inflow today, Pagaria said.

Due to the changes in weightage, Pagaria said HDFC Bank will see a buy of 3.5 million shares. LTIMindtree (1.66 million shares), JSW Steel (15 million shares), Jindal Steel & Power (4 million shares), IndusInd Bank (4,00,000 shares), Bank of Baroda (1.2 million shares), AU Small Finance Bank (3,00,000 shares), Federal Bank (1.3 million shares), IDFC First Bank (2 million shares), PNB (1.9 million shares), Bandhan Bank (5,00,000 shares) will also see significant buys.

On the other hand, ICICI Bank will see a selloff of 4.2 million shares, followed by SBI (3.9 million shares), ITC (1.3 million shares), Kotak Mahindra Bank (7,00,000 shares), Axis Bank (7,00,000 shares), RIL (5,00,000 shares), Infosys (5,00,000 shares), and TCS (2,00,000 shares).

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