Stocks react post change in Indices constituent

Post the announcement of changes in the constituents of Nifty 50 and other indices, notable names like Indiabulls Housing Finance and Indian Oil Corporations rose in trade, whereas, Idea and BHEL declined in trade after being excluded from Nifty 50.

The National Stock Exchange (NSE) arm India Index Services and Products Limited (IISL) responsible for managing the portfolio of indices under Nifty Brand, made some changes in the constituents of NSE indices effective from March 31, 2017.

The biggest change of all was when the country’s second largest housing finance company-Indiabulls Housing Finance and India's largest oil marketing company-Indian Oil were included in the prestigious Nifty50 index. Making way for them were telecom major Idea Cellular and state-owned engineering company BHEL.

Reacting to the news, Indiabulls Housing and IOC gained 6 per cent & 3 per cent, respectively to trade at respective highs. On the losing side, Idea Cellular and BHEL lost ground as they both declined by close to 3 per cent in trade.

Usually a change in index constituents is on the basis of underlying securities performance in the broader market with respect to financial and capital market performance.