Numbers, like photographs, almost always speak the truth. In the 21 years between 1991 and 2012 when he was the chairman, Ratan Tata led a transformation of the industrial group that resulted in the market capitalisation of group companies jumping 17 times and breaching market cap cumulative figure of Rs 30 lakh crore, which is more than 10% of India’s estimated GDP of Rs 295.36 lakh crore in FY24.
In this context, it is significant that Nifty has a specific index comprising Tata companies. It is known as Nifty Tata Group 25 Cap which represents the performance of several stocks from the group that are listed on NSE. It has 10 stocks and was launched on April 3, 2024. In a sense it is also a recognition of the powerhouse that Ratan Tata had transformed the group into during the course of his stewardship of the conglomerate.
Overwhelming IT presence
Quite predictably, the largest weight in the index is enjoyed by information technology – 27.03% (TCS 24.53%, Tata Elxsi 2.5%).
The other sectors represented in the index are consumer durables 16.94% (Titan, 14.62%, Voltas 2.32%), automobile and automobile components 18.95% (Tata Motors 16.11%, Tata Motors DVR 2.83%), metals and mining 11.83% (Tata Steel), consumer services 12.75% (Trent 8.02%, Indian Hotels 4.73%), fast moving consumer goods 6.35% (Tata Consumer Products), power 6.15% (Tata Power). Other sectors are telecom, chemicals, financial services and capital goods.
Free float method
The index has been constructed on a free float market capitalisation method. It is computed by multiplying the stock price by the number of shares that are available to the public for trading – free float – and thereby excludes shares held by promoters and governments. Since it does not include these clusters of holdings, this type of computation offers a realistic picture of the market situation.
The indices have a base date of April 01, 2005 and a base value of 1000.
Road ahead
The fact that Nifty does not have any index constructed exclusively out of the stocks of any other corporate group in India is a recognition of the importance of Tata stocks for the average investor.
It is expected that as the group evolves into newer horizons such as semiconductor chip manufacturing – Tata Electronics is launching facilities in Gujarat and Assam – the index might be reconstituted in future to reflect the emerging picture of the conglomerate.
National Stock Exchange has a specific index comprising Tata companies. It is worth a look at this index. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
