The Bombay Stock Exchange has decided to include TCS and National Thermal Power Corporation in the Sensex in place of Zee Telefilms and HPCL from June 6.
In the five trading days from April 18 to April 22, the BSE Sensex gained 3.08 per cent from 6156.78 to 6346.57. In comparison, the S&P CNX Nifty gained only 2.05 per cent from 1927.80 to 1967.35 mainly because of the TCS impact.
TCS fell a huge 11.57 per cent during the week from Rs 1295 on April 18 to Rs 1145.15 on April 22 mainly because of the 33 per cent drop in Q4 net profit announced on a flat revenue growth.
TCS has a weight of 6.51 per cent in the Nifty. If the stock continues to display weakness, it may dampen any rise in the Sensex after its inclusion.
The other stock being included in the Sensex is NTPC, which has moved up 2.47 per cent from Rs 83.05 to Rs 85.10.
Zee Telefilm, which is being dropped, rose by 1.82 per cent during the period from Rs 129.20 to Rs 131.55 while HPCL, which is also moving out of the Sensex, fell by 0.86 per cent from Rs 325.05 to Rs 322.25.
The two stocks, which are being dropped from the Sensex, have not moved in such a wide range, as has TCS during the last week.
TCS results had caused wild intra-day swings in the Sensex on April 19. The BSE Sensex on April 19 was up 113 points at one point after two consecutive days of large losses, but as soon as TCS results were announced just before the closing time, the BSE Sensex tanked.
It not only lost all its gains but closed 21.92 points lower than its close on April 18, moving in a range of over 130 points.
The loss on the Sensex was almost in a 1:1 ratio with that on the Nifty. Usually, the ratio of the loss (gain) in Sensex to that of Nifty is 3:1 or 4:1, but because of the sharp fall in TCS, the ratio was altered that day.