Playing a game of Footsie

The successful efforts of Williams to gain promotion to the FT- SE 100 index of top shares may all have been in vain, judging by the subsequent fall in its share price last week. .

On Wednesday, the conglomerate headed by Sir Nigel Rudd was one of five stocks to climb into the FT-SE 100 judged by market capitalisation. It was a close run thing, according to Stephen Vale, secretary to the FT- SE Actuaries UK Indices Committee, which overseas quarterly changes to the constituents.

New entrants last Wednesday morning were determined by relative market capitalisations at closing stock prices on Tuesday. Williams which closed at 374.5p was valued at pounds 2,916m and made the grade. Next, capitalised at just pounds 14m less with its shares at 776p, narrowly failed to re-enter the FT-SE 100.

Williams rejects charges that it carefully chose to release last week's half-year figures on Wednesday morning so that it would be too late for any stock price changes to affect that vital Tuesday night calculation.

"It had nothing to do with it," said a spokesman. "We always release figures on Wednesday. " Williams in fact released the equivalent 1996 results on the Tuesday, though the last set of full year figures were given out on a Wednesday.

Ahead of the profit figures, Williams shares had risen around 20p in the previous two weeks. On the release of the figures the shares promptly shed 15p and ended the week at 354p. According to the Williams spokes- man, the company had in fact expected its shares to rise not fall on the figures. Either way, it is doubtful whether Williams would have gained entry on the basis of the lower numbers.

Williams entry is not the only one to raise eyebrows. Sun Life & Provincial gained entry by choosing Tuesday as the day to issue a huge volume of new shares to complete its merger with Axa Equity & Law. Without that increase in size, it would not have qualified for entry to the FT-SE 100.

Some reckon inclusion is not that important except perhaps for gaining the attention of overseas investors who may not look beyond the FT-SE 100. The argument that tracking funds are forced to buy the shares loses some force since most, according to analysts, tend to track the wider FT-SE 350 index.

Nothing about the FT-SE 100 surprises Guy Fisher, a quantitive analyst with NatWest Markets in Edinburgh. "Quite often I notice for example that the shares of companies that look like they are going to drop out of the index start to go up for some reason," said Mr Fisher.

Last week, Williams went in at 85th place with the other new entrants being Norwich Union, Billiton, Woolwich, and Sun Life. Under the rules, any company not in the FT-SE 100 that is 90th or higher by capitalisation automatically goes in. Any company already in the index that has fallen to 111th place or lower automatically goes out.

As five companies qualified for automatic entry, the five lowest in the FT-SE 100 dropped out - Tate & Lyle, Hanson, Imperial Tobacco, Mercury Asset Management and Burmah Castrol.