Anticipated change in index!

Whenever there is an anticipated change in an index, such as when a new stock is about to be introduced or weightage of existing stocks is about to increase, we see its share price go higher in anticipation of incremental buying by passive funds. Similarly, when a company is taken out of the index, the stock takes a beating in anticipation that these funds will sell shares when the event happens. Smart traders do not wait for the event to happen before taking a position.