The rebalancing of the S&P/ASX 100 (Index:^ATOI) (ASX:XTO) is event worth watching as it has a tendency to give a boost to the share prices of ASX shares that are added to the benchmark.
Given the volatility on the market with the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index falling more than 1% during lunch time trade, we should appreciate every little help we can get.
While the market can generally work out which stocks will be dumped and which will be added ahead of time, research has shown the inclusion of new ASX 100 members still has a positive impact on the share prices of these large caps after they are added to the index.
Stocks get moved from an index for several reasons and the most common is share price performance.
This isn't the only benchmark used by Standard's and Poor (S&P) in determining which stock gets in and which gets kicked out. Other factors such as liquidity also plays a part.
Stocks to enjoy the ASX 100 boost
On that note, investors looking for large cap ASX shares that could get an extra push from being part of the ASX 100 index will want to keep an eye on the Worleyparsons Limited (ASX: WOR) share price ahead of its inclusion in the top 100 benchmark on Christmas eve.
Shareholders will be hoping that the S&P magic works this time after watching the share price collapse 37% over the past three months when the ASX 100 is only down 9%.
The volatile oil price is hurting sentiment towards the group and its recent capital raising has also added downward pressure on the stock, but I think the WOR share price will outperform as the stock is looking cheap and its outlook is positive.
Another new addition to the ASX 100 is enlarged Nine Entertainment Co Holdings Ltd (ASX: NEC) following its merger with Fairfax Media.
The NEC share price isn't seeing much optimism today though as it slumped 8.9% in late afternoon trade to $1.49 – making it the worst large cap performer at the time of writing.
Potential stock sell-offs
On the flipside, stocks that have been cut from the top 100 index could struggle to find much love over the coming months.
From that perspective, the Harvey Norman Holdings Limited (ASX: HVN) share price could come under increase pressure with the furniture and electronics retailer has been tainted by worries that the housing slump would impinge on its revenues.
Building materials supplier CSR Limited's (ASX: CSR) share price is another that could come under selling pressure as its shares were also cut from the index.
Sentiment towards CSR has been weak because of the residential property market downturn.
