Stocks rose for a third day, led by Reliance Industries (RIL) and Infosys Technologies on expectation that they would benefit from a change in the way the National Stock Exchange (NSE) computes the S&P CNX Nifty Index.
RIL, the nation’s most valuable company, gained 5.5 per cent. Infosys added 1.4 per cent. The weight of both stocks will increase in the Nifty using the new free-float computation.
“Stocks are up ahead of tomorrow’s derivatives expiry, so we are seeing some squaring up of short positions,” said Shashank Khade, who helps manage $300 million at Kotak Securities in Mumbai. “The Nifty moving to free-float calculation is also boosting stocks where weights will rise.”
The Bombay Stock Exchange’s Sensex rose 196.86 points, or 2.1 per cent, to 9,667.90. The S&P CNX Nifty Index on the NSE added 1.6 per cent to 2,984.35. While the BSE 200 Index added 2 per cent to 1,123.68, Nifty futures for March delivery added 1.9 per cent to 2,993.05.
S&P CNX Nifty Index will be computed by the free-float market capitalisation method starting June 26, the bourse said. The Nifty is currently calculated using the full market capitalisation weighted method.
RIL gained 5.5 per cent to Rs 1,532.20. Infosys added 1.4 per cent to Rs 1,338.95.
NTPC, Bharti Airtel and Oil & Natural Gas Corp (ONGC) dropped as their weighting in the Nifty will decline. NTPC slid 2.3 per cent to Rs 177. Bharti fell 2.1 per cent to Rs 591. ONGC fell 2 per cent to Rs 763.70.
ONGC fell after Kotak Securities cut the stock’s rating as returns exceeded that of the benchmark.
The stock was cut to “add” from “buy” after the stock’s 21 per cent gain over the past three months exceeded the benchmark’s 1.5 per cent advance in the same period.
“ONGC’s earnings have limited leverage to crude oil prices beyond a certain level in the current regulatory environment,” Sanjeev Prasad, an analyst at Kotak said in a note to clients On Wednesday.
Overseas investors bought a net Rs 316 crore ($62 million) of Indian stocks on March 23.
Crompton Greaves dropped 13 per cent to Rs 106.15, its lowest since December 2005. The shares extended yesterday’s 9.9 per cent decline after JPMorgan Chase & Co said the company’s proposed acquisition of a 41 per cent stake in Avantha Power appeared expensive.
Novartis India surged by its 20 per cent limit to Rs 330.70, its biggest gain since 1991, after the parent Novartis AG said it will seek to buy back the 39 per cent stake it doesn’t already own in the Indian unit, raising its stake to 90 per cent.
Ranbaxy fell 0.7 per cent to Rs 163. The Indian drugmaker had its share price target reduced by 28 per cent to Rs 128 by Morgan Stanley.
Satyam Computer Services declined 3 per cent to Rs 40.35. The fraud-hit software exporter said it may name the successful bidder to buy a controlling stake in itself by April 30. The buyer of the stake shouldn’t sell the company’s assets for two years, Hyderabad-based Satyam said in a statement to the BSE. The winner must also retain at least 100 key employees for one year, it said.
Tata Power gained 6.7 per cent to Rs 739.55. India\’s biggest electricity generator outside state control said it received Rs 317 crore from selling a stake in Tata Teleservices.
