Under the new rule, the target company will be deleted from the index a day before the ex-date in case of a merger. Simultaneously, the weight of the acquirer if part of the same index will be increased, and an eligible name will be added to the index on the same day.
NSE Indices sought market participants’ feedback on the ‘treatment of merger and demerger’ in the Nifty indices last month.
“As expected, the modified methodology evades HDFC Ltd’s immediate exclusion from Nifty 50. The stock will only get replaced by another contender on the ex-date of the HDFC- HDFC Bank merger,” said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research.