MUMBAI: Tata Motors, among the original constituents of the Sensex, has been dropped from the index for the second time and will be replaced by InterGlobe Aviation, the operator of the country's largest airline IndiGo, from December 22, the BSE Index Services has said.
This comes after the company was spun off into two separate companies since October -- Tata Motors Passenger Vehicles, which deals with passenger vehicles, and Tata Motors, which runs commercial vehicles. This led to the market cap of the parent company getting diluted.
Another original constituent of the Sensex, Nestlé, had been dropped in June’s rebalancing. In a statement, the BSE said the changes have been announced by BSE Index Services (formerly Asia Index) as a part of the reconstitution of its indices, effective when the market opens on Monday, December 22. The index is reconstituted twice a year in July and December.
In the BSE 100 index, IDFC First Bank will be included, replacing Adani Green Energy. Within the BSE Sensex 50, Max Healthcare Institute will be added and IndusInd Bank removed.
Meanwhile, in the BSE Sensex Next 50 index, IndusInd Bank and IDFC First Bank will replace Max Healthcare Institute and Adani Green Energy.
Tata Motors had previously exited the benchmark index in December 2019 amid a poor run in the equity markets against the backdrop of uncertain business visibility and high debt, before rejoining it in December 2022.
Following the split, Tata Motors’ commercial vehicles business is valued at Rs 1.1 trillion, while Tata Motors Passenger Vehicles commands a mcap of Rs 1.2 trillion. IndiGo, by contrast, sits well above both at Rs 2.1 trillion.
Exclusion from the benchmark would likely lead to a passive fund outflow of about Rs 2,232 crore from Tata Motors, while IndiGo may draw inflows of roughly Rs 3,157 crore.
The Sensex, which was launched on January 1, 1986 with a base value of 100 backdated to 1979, is the bellwether for the economy and equity markets.
Of the original 30 stocks, only three -- Reliance Industries, Hindustan Unilever and ITC -- have remained uninterrupted members. Other founding names including Larsen & Toubro, Tata Steel, Tata Motors and Mahindra & Mahindra continue to feature today, though each has been dropped and reintroduced at various points.
Among current members, Infosys and SBI stand out as the longest-serving additions, though both joined after the index’s inception.