Here’s why HDFC delisting might pave the way for LTIMindtree to enter Nifty50 index

Delisting of country’s largest mortgage lender HDFC shares is likely to pave the way for LTIMindtree to enter the benchmark Nifty50 index.

On July 13, the delisting of country’s largest mortgage lender HDFC shares is likely to pave the way for LTIMindtree to enter the benchmark Nifty50 index.

LTIMindtree is the country’s fifth-largest IT services provider by market capitalisation and sixth-largest by revenue.

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Deepak Parekh, the HDFC chairman on Tuesday said that the merger of HDFC with the largest private lender HDFC Bank will be effective from July 1 while the shares of HDFC will get delisted effective July 13.

HDFC and HDFC Bank, both are heavyweights on the benchmark index Nifty50. While HDFC Bank has 8.73% weightage on the index, housing finance major HDFC has a weight of 5.88% on Nifty50.

As per the Nuvama Alternative & Quantitative Research, after delisting of HDFC stock, LTIMindtree is a high-conviction replacement for the index.

On 27th June, the share price of LTIMindtree ended 3.05% higher at ₹5,160.00 apiece, with a market capitalisation of ₹1,52,676.84 crore on the NSE. And after the merger, LTIMindtree will become the 50th biggest company in India by market capitalization.

According to the preliminary calculations by Nuvama, LTIMindtree should see an inflow of $150 million to $160 million. As per NSE, the constituents for Nifty50 are selected from the universe of Nifty 100 based on free float market capitalisation and liquid companies having average impact cost of 0.50% or less for 90% of the observations for a basket size of ₹10 crore.

Changers in the Nifty Bank index after the merger might be seen. The shares of HDFC Bank ended 1.39% higher at ₹1,658.25 apiece on Tuesday, while HDFC closed 1.33% higher at ₹2,756.60 apiece on the NSE.