A telephone handset sits on a desk on the trading floor. (Photographer: Jason Alden/Bloomberg)

Sensex Rejig: Dr. Reddy’s Loss Is Vedanta’s Gain 

Indian pharmaceutical industry will have less representation on the country’s oldest equity benchmark after a routine rejig.

The representation of various sectors of India Inc. on the S&P BSE Sensex will change as the index gets reconstituted on Monday. Six sectors out of the 11 will see a decline in weightages.

The weightage of the pharmaceutical sector will drop to an eight-year low after Dr. Reddy’s Laboratories Ltd. makes way for Vedanta Ltd.

Healthcare’s Weight Drops

With the exit of Dr. Reddy’s Ltd., the only drugmaker that will remain on the index is Sun Pharmaceutical Industries Ltd. That’s reflective of the challenges faced by Indian drugmakers, including pricing pressure in the world’s biggest market, the U.S., and regulatory hurdles.

BFSI Dominant

The Sensex will feature a total of eight banking and financial services companies, including State Bank of India, with a net weight of 40.4 percent. No insurance company will make the cut. The sector, which saw its weight rising two-fold to historic highs in the last decade, will drop by 40 basis points.

Metals Rise

Vedanta’s inclusion will ramp up the metal sector’s weight by 130 bps — less than 50 percent of what it was six years ago. Two stocks will represent the sector after nearly three years, the other being Tata Steel Ltd.

Holding Ground

Of the 31 Sensex stocks, 18 have been a part of the index for the last decade. Their combined weight has declined by 160 basis points to 77.7 percent. Among the heavyweights, Reliance Industries Ltd.’s weight has dropped by 6.3 percentage points, while HDFC Bank’s increased by 8.3 percentage points.

Lone Rangers

Capital goods and telecommunications are the other sectors that are represented by a single stock. The weight of these sectors will also fall to all-time lows of 4.7 percent and 1.2 percent, respectively. They are represented by Larsen & Toubro Ltd. and Bharti Airtel Ltd.

Missing

The last time a cement company and a real-estate company were on the index was in the financial years 2009-10 and 2011-12, respectively.