Ireda Misses NSE Key Indices Spot After SEBI Norm Breach, Shares Fall
The stock fell as much as 3.83% during the day on the NSE.
Indian Renewable Energy Development Agency Ltd.'s inclusion from the National Stock Exchange's key indices has been revoked due to non-compliance with the market regulator's portfolio-concentration norms.
As Ireda breached one of the requirements of the Securities and Exchange Board of India's portfolio-concentration norms for equity exchange-traded funds and index funds, the index maintenance sub-committee decided to revoke the earlier decision, the NSE said in a statement on March 19.
As part of periodic review of various indices, the NSE included Ireda in the Nifty 500, Midcap 150, Midcap 100, Nifty 200, LargeMidcap 250, MidSmallcap 400, Nifty Total Market and Nifty500 Multicap 50:25:25 indices.
The companies being excluded following Ireda's entry will continue to remain a part of the indices. The changes in the index will be effective from March 28. All other replacements announced on Feb. 28 will remain unchanged.
Ireda failed to keep up with the SEBI norm that mandates individual constituents to have a trading frequency greater than or equal to 80% and an average impact cost of 1% or less over the previous six months.
Other portfolio-concentration norms include:
The index must have a minimum of 10 stocks as its constituents.
For a sectoral/thematic index, no single stock must have more than 35% weight in the index. For other than sectoral/thematic indices, no single stock must have more than 25% weight in the index.
The weightage of the top three constituents of the index, cumulatively must not be more than 65% of the index.
The stock fell as much as 3.83% during the day to Rs 124.40 apiece on the NSE. It was trading 2.67% lower at Rs 125.9 per share, compared to a 0.12% decline in the benchmark Nifty 50 as of 11:14 a.m.
The share price has risen 109% in the last 12 months. The total traded volume so far in the day stood at 0.5 times its 30-day average. The relative strength index was at 36.2.
An analyst tracking the company has a 'sell' rating on the stock, according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 36.3%.