Mumbai Feb 26 :- The Index Maintenance Sub-Committee – Equity (IMSC) of NSE Indices Ltd has decided to relax the eligibility criteria of Nifty equity indices and for replacement of stocks in various indices, as part of its periodic review. It has reduced the minimum listing history of constituents from three months to one calendar month.
The changes will be effective from March 31. Market sources say the relaxation will pave the way for the inclusion of Life Insurance Corporation (LIC), which plans to list its shares in March, in the benchmark Nifty 50 Index.
The government and LIC are going ahead with the listing of the latter’s shares, despite high volatility in the markets amid increasing global concerns over Russia’s invasion of Ukraine.
Investment banking sources said once the Sebi approves the issue, the IPO will open for subscription in the second week of March and trading will commence by the third week.
The government expects to mobilise Rs 63,000-66,000 crore from the proposed offer for sale (OFS) to meet its disinvestment target of Rs 78,000 crore for FY22. While LIC is yet to announce the IPO price, market estimates are that the IPO is likely to be Rs 2,000-2,100 per share.
From March 31, minimum listing history of a constituent on NSE will be down to one month. This is likely to make LIC’s listing on Nifty 50 — NSE’s benchmark index — smoother.
An Edelweiss Alternative Research report said, “Despite being a lower float name, there is a medium to high probability of the stock (LIC) getting fast entry in the MSCI Index. As in the case of bigger issuances, the index provider does not compulsorily require minimum length of trading requirement or foreign inclusion factor (FIF) of 0.15.”
The key aspect to be kept on radar will be the issue size and the final listing market capitalisation, as anything below Rs 10.7 lakh crore valuation at listing can make the inclusion difficult. “Also, interim market size segment cut off will be an important level to watch out for,” the report said.
