Shares in Indian billionaire Anil Ambani's flagship Reliance Communications fell nearly eight percent on Monday after the group was removed from the benchmark index of the Bombay Stock Exchange (BSE). RCom, India's second largest mobile phone firm, closed down 7.89 percent to 87.6 rupees ($1.95) while Reliance Infrastructure, which was also removed from the index, ended down 6.07 percent to 545.25 rupees.
From August 8, both companies will be pulled out of the group of 30 leading shares that form the Sensitive index or Sensex, the BSE said without giving reasons. They will be replaced by Sun Pharmaceuticals and the state-run giant Coal India respectively. A BSE source told AFP on Monday that the stock exchange had no role in deciding the change. "An independent committee of experts decides on changes in indices" based on parameters such as liquidity, market capitalisation, trading volumes, history, sector representation and portion of shares held by investors for trade, the source added. RCom's stock has more than halved from its year-high price of 204.75 in June last year, while Reliance Infrastructure is down 55 percent from its 52-week high of 1,225 rupees.
Intraday, RCom shares were down nearly 10 percent while Reliance Infrastructure had lost just over 8.5 percent. The withdrawal of the firms comes at a time when Anil Ambani is attempting to revive the fortunes of his businesses, particularly in the key telecoms and financial services sectors.
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