Infosys might be No. 1 stock on Sensex, Nifty, and MSCI Index

India's second-largest software exporter Infosys might occupy the position of the most influential stock on benchmark indices such as Sensex, Nifty and MSCI Index as market regulator SEBI came up with new guidelines.

The Securities and Exchange Board of India (SEBI) has said that existing promoters might be reclassified as public if a company becomes professionally managed and does not have any identifiable promoter, according to an ET report.

According to experts, the move if implemented would increase the value of the Bengaluru-based company on these benchmark indices even ahead of mortgage lender HDFC.

"The re-classification of Infosys promoters can be seen as positive move from the stock prospective as exchange traded funds are expected to buy the stock," Vinod Nair, head of research at Geojit BNP Paribas, told ET.

Analysts estimate Infosys' weightage on Nifty could increase to about 7.4% from 5.7%, to around 9.2% from 7.2% on the Sensex, and to 11.1% from 9.7% on MSCI India index once the proposal is finalized, reported the financial daily.

It is important to know that weightages of stocks on benchmark indices are dependent on the extent of public shareholding.

On Wednesday, HDFC's weightage on Nifty was at 8.8%. The current free float of Infosys is around 84%. Money managers are of the view that a rise in weightage could boost Infosys' near-term prospects.

Moreover, the company’s stock gained 24% during the last one year and has outperformed its rivals - TCS which has gained 14%, and Wipro 5% in the same period. The stock has also outperformed the Sensex that has risen 9.5% during last one year.

Meanwhile, Infosys promoters presently have 13.08% stake in the company, while foreign institutional investors (FIIs) account for around 38% stake and local funds hold about 15% equity.

In October 2014, NR Narayana Murthy, Nandan Nilekani, S Gopalakrishnan, SD Shibulal and K Dinesh had written to Infosys saying that their shareholdings should not come under promoters' category, and instead should be reclassified as public holding.
(Image: Reuters)