Reliance Industries will be replaced by HDFC Bank as the top weight in Sensex and Nifty 50

The biggest private sector bank in the nation will replace Reliance Industries as the bluechip with the greatest weighting in the benchmark NSE Nifty 50 and BSE Sensex when the HDFC-HDFC Bank merger takes effect on July 1.

The weight of HDFC Bank will rise to 14.43% as of July 13 when HDFC shares will be removed from the important index. Reliance now holds 10.9% of the Nifty, which will drop to 10.8% after 10 basis points (bps).

RIL has a weighted of almost 12% in the Sensex. The weights of HDFC Bank and HDFC are 8.8% and 6% for the Nifty and 9.9% and 6.8% for the Sensex, respectively.

The free float of HDFC Bank would be the biggest among all listed equities since, unlike Reliance Industries, it has no promoter. The National Stock Exchange (NSE) determines the weighting using the free float market capitalization approach, which causes the equities having a larger free float to also have a higher weighting in the indexes.

According to Nuvama, HDFC Bank’s weight in the Nifty Bank index will increase from 26.9% to 29.1%, bringing in about $70 million from passive funds. The weight of ICICI Bank, the second-largest lender by weight, would drop by 1.1 percentage points to 23.3%. The banking index will also reduce the weights of State Bank of India, Axis Bank, and Kotak Mahindra Bank.

According to the pro forma approach, the combined firm will be weighted in the Sensex and Nifty at 16.7% and 14.8%, respectively.

However, the combined HDFC Bank would have a market capitalization of around Rs 14.7 trillion, which is less than Reliance’s market capitalization of Rs 17.3 trillion. Tata Consultancy Services (TCS), which is presently valued at Rs 12.1 trillion, will be surpassed by HDFC Bank.

Along with Reliance Industries, the Nifty 50 index will have less weight assigned to ICICI Bank, Infosys, ITC, and TCS.