(FE)
Successful utilisation of exchange-traded funds (ETFs) to mop up more than half of its Rs 85,000-crore disinvestment receipts in FY19 has prompted the Centre to consider replacing half-a-dozen stocks from the Bharat 22 ETF and two from the CPSE ETF, and use them to mobilise a major chunk of the Rs 90,000-crore disinvestment planned for FY20. Stock rejig has become necessary as the Centre’s holding in many PSUs has reached the threshold limit of 52% (the minimum shareholding prescribed for the PSUs in the ETF baskets) in Bharat 22 ETF, a diversified index of 22 stocks. These include Indian Oil (4.05% weight in the index), Nalco (5.78%), GAIL (4.41%) and Engineers India (0.98%).
Besides, two more stocks in the index also need to be removed for some other reasons. The Centre’s holding in L&T (15.77% weight) via SUUTI has been exhausted in FY19, hence these have to be dropped. Similarly, the Centre has sold its 52.63% stake in REC (0.82% weight) to PFC, leaving no further scope to divest in the company. In February, Bharat 22 ETF had to buy three stocks, including REC from the market, to maintain their weight in the index as the government had no more headroom to divest in these companies.
