RCOM & RINFRA moves out of sensex

Reliance Infrastructure and Reliance Communications would be excluded from the benchmark index SENSEX. The exchange would replace Reliance Infrastructure with state-run Coal India and Reliance Communications with Sun Pharmaceutical in the 30-stock Sensex, BSE said in a statement.

The last time Asia’s oldest stock exchange made revision in Sensex was on December 6, 2010, by removing ACC with Bajaj Auto.

Both the companies of ADAG stable will see selling pressure on Monday when market opens for trade. The basic reason is the portfolio reshuffling that will happen on account of this exclusion. Index funds across the globe will sell RCom and RInfra and include Coal India and Sun Pharma in their portfolio to adjust the weightage. Another reason why this stock could underperform is the sheer sentiment shift that will happen when these companies are no longer part of the benchmark indices. ADAG companies have already been underperforming because of recent news of Rcom involved in 2G scam.

InvestorZclub recommended avoid on ADAG companies in an article "Stocks to Avoid in 2011" dated 20th April 2011, and we continue to be bearish on Anil Ambani group of companies.

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