BSE Drops Two Pharma Stocks From Sensex; Replaces Them With Private Banks
Lupin and Cipla replaced with IndusInd and Yes Bank in Sensex.
The S&P BSE Sensex will include two more banks from mid-Dec. while two pharmaceutical stocks will exit the index.
BSE Ltd. will drop drugmakers Cipla Ltd. and Lupin Ltd. from the Sensex and replace them with private lenders IndusInd Bank Ltd. and Yes Bank Ltd. in its latest periodic rejig, the country’s oldest stock exchange said in a media statement. The changes will come into effect from Dec. 18.
The changes reflect challenges faced by Indian drugmakers – increased competition, pricing pressure and regulatory hurdles – in the key U.S. market. Pharmaceutical stocks, particularly Lupin, have been battered this year. The BSE Healthcare index declined 6.7 percent in 2017 while Lupin fell 44.2 percent. Cipla, however, has seen a 7 percent rise in the same period.
This will leave the Sensex with just two pharmaceutical stocks – Sun Pharmaceuticals Ltd. and Dr. Reddy's Laboratories Ltd.
The reconstitution will also mean higher dominance of banks in India’s benchmark index. With the addition of the two private lenders, the total number of banks in the Sensex will increase to seven out of the 31 stocks. In its previous reconstitution in June, the BSE had included Kotak Mahindra Bank in Sensex.
In contrast to drugmakers, the S&P Bankex has rose 41 percent this year. IndusInd Bank climbed 47.3 percent, while Yes Bank’s gains stood at 32.3 percent in 2017.
A host of changes were made in BSE's sectoral indices too. Federal Bank Ltd., Grasim Industries Ltd., Vakrangee Ltd. and Bajaj Holdings & Investment Ltd. were included in the S&P BSE 100 index while United Breweries Ltd., Steel Authority of India Ltd., Canara Bank Ltd. and Reliance Infrastructure Ltd. moved out.
No changes were made to BSE Oil and Gas index and the BSE Bankex index.
The full list of changes can be accessed here.