ICICI, L&T, RIL to gain from Nifty rejig: Benchmark AMC

Benchmark AMC said that ICICI, L&T, and RIL are likely to gain with fund managers rejigging index funds as Nifty switches from tomorrow to a float market capitalisation methodology. Index funds will have to change portfolios to maintain weightages. Weightages of PSU companies on the Nifty would fall due to high government holdings, the AMC said. Under the full-market capitalization methodology, the total market capitalization of a company, irrespective of who is holding the shares, is taken into consideration for computation of an index. However, if instead of taking the total market capitalization, only the free-float market capitalization of a company is considered for index calculation, it is called the free-float methodology. Free-float market capitalization is defined as that proportion of total shares issued by the company which are readily available for trading in the market. It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares, which will not come to the market for trading in the normal course. Thus, the market capitalization of each company in a Free-float index is reduced to the extent of its Free-float available in the market.