Gas Authority of India Limited (GAIL), India largest gas distribution company, will replace Jaiprakash Associate in SENSEX, the 30 stock benchmark index of BSE, from 9th Dec 2011.
JP Associate has been a significant under performer since past 1 year and has lost significant market capitalization, which has compelled it to be moved out of the India's most tracked index. At the current market price of Rs.60 the market value of JP Associate stands at Rs. 12,900 crores.
GAIL on the other hand has the current market capitalization of Rs. 48,700 crores, almost four times the size of JP Associate.
The news would put further pressure on JP Associate and the stock could correct further from the current levels. On the other hand GAIL could see more money flowing into its stock and hence could give decent return from the current price of Rs. 384.