Whalesbook
The Bombay Stock Exchange (BSE) is set to announce its semi-annual reshuffle of the benchmark Sensex index today, May 22. Market watchers widely expect Hindalco Industries to take Trent's place in the prestigious 30-share index.
Hindalco's Strong Performance
Aakash Shah, Technical Analyst at Choice Broking, pointed to Hindalco's superior relative strength. The stock shows a consistent pattern of higher highs and higher lows, supported by growing trading volumes and steady institutional investment. "The stock is outperforming its industry peers, indicating strong momentum as the index review approaches," Shah stated.
Trent's Momentum Dip
In contrast, Trent's performance has shown signs of weakening after a previous strong run. Shah noted the stock is currently in a consolidation phase, with reduced buying interest and softer relative strength. Nuvama Alternative & Quantitative Research agrees, forecasting Trent's exit from the BSE Sensex. This is due to a decrease in its free-float market capitalization compared to other index members. Nuvama estimates this exclusion could result in passive fund outflows of about USD 257 million.
Other Potential Candidates
Nuvama identified Hindalco Industries and Shriram Finance as the main contenders for Trent's possible vacancy. Although Shriram Finance currently has a larger free-float market capitalization, Nuvama suggests Hindalco may have an edge. This could be due to the index committee's aim for broader sector representation in the index. The final decision, however, lies with the Sensex Index Committee, which may consider factors beyond strict quantitative measures.
Stock Performance
Trent shares closed at Rs 4,170.05 on Thursday, up 1.75%. However, the stock has declined 10.65% over the last two years. Hindalco Industries finished at Rs 1,099, gaining 1.21% for the day, and has seen a 65.80% increase in the past year. Shriram Finance Ltd ended Thursday's session at Rs 914.85, down 0.93%. Its shares have risen 39.12% over the past year but are down 10.28% year-to-date.