Key Takeaways
- Tata Motors removed from Sensex for second time, replaced by IndiGo operator InterGlobe Aviation
- Change effective from December 22 following company split and market cap dilution
- Passive fund flows: Tata Motors may see ~₹2,232 crore outflow, IndiGo ~₹3,157 crore inflow
Tata Motors, one of the original Sensex constituents, has been dropped from India’s benchmark stock index and will be replaced by InterGlobe Aviation, operator of IndiGo airline, effective December 22. This marks the second time Tata Motors exits the 30-stock index, with the change driven by the company’s recent split and resulting market capitalization dilution.
Restructuring Triggers Change
The automaker’s October split created two separate entities: Tata Motors Passenger Vehicles and Tata Motors (commercial vehicles). This restructuring diluted the parent company’s market value, prompting the removal. Another original constituent, Nestlé, was dropped during June’s rebalancing.
BSE Index Services announced the changes as part of its semi-annual index reconstitution, effective when markets open on December 22.
Broader Index Reshuffling
The reshuffle extends across multiple BSE indices:
- BSE 100: IDFC First Bank replaces Adani Green Energy
- Sensex 50: Max Healthcare Institute added, IndusInd Bank removed
- Sensex Next 50: IndusInd Bank and IDFC First Bank replace Max Healthcare Institute and Adani Green Energy
Market Impact and Valuations
Tata Motors previously exited the Sensex in December 2019 during market uncertainty and high debt, rejoining in December 2022. Post-split valuations show the commercial vehicles business at ₹1.1 trillion and passenger vehicles at ₹1.2 trillion, while IndiGo commands ₹2.1 trillion.
The exclusion may trigger passive fund outflows of approximately ₹2,232 crore from Tata Motors, with IndiGo potentially drawing ₹3,157 crore in inflows.
Sensex Legacy and Membership
Launched in 1986, the Sensex remains India’s key economic indicator. Of the original 30 stocks, only Reliance Industries, Hindustan Unilever and ITC have maintained uninterrupted membership. Other founding members like Larsen & Toubro, Tata Steel, Tata Motors and Mahindra & Mahindra have experienced periodic exits and returns.
Among current members, Infosys and SBI represent the longest-serving additions, though both joined after the index’s inception.
