Thursday, July 10, 2008

Future Sensex Candidates

BSE determines the candidates for Sensex based on free float average market capitalization of stock for 6-months. But it also looks at sectors. Based on BSE , it seems that top 17 are already in Sensex. Reliance Petroleum and Essar Oil have been skipped to take Tata Power and Sterlite into Sensex from 28 July. Stocks till Maruti Suzuki are in Sensex which has free float market cap of around 8000-8500 Cr. Axis Bank, Reliance Capital and IDFC from finance,
Sun Pharma from Pharmaceutical
Cairn and GAIL from Oil and Gas
Jindal Steel and Power from Metals/Power
might be the next candidates to enter Sensex. Stocks to go out will be Maruti Suzuki or Mahindra and Mahindra.

This shows that Auto is no longer a core sector in India's economy or is slowly going out just like GM and Ford went out in US. In pharma also the growth has slowed a lot. Just like Ambuja, ACC will also go out of Sensex within 2-3 years.

The companies which look promising to me over 10-15 year period to enter Sensex are Nestle and Asian Paints. Nestle was part of Sensex till 2003 and Asian Paints was in Nifty in mid nineties. The problem with Nestle is volumes. Otherwise I am sure it will replace HUL in the next 10-15 years.
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