Market Watch: Firms ride rollercoaster in FTSE-100 reshuffle

The "yo-yo" stock has bounced between the FTSE 100 and 250 in recent years but its latest stay in the top flight since December 2008 looks set to come to an end.

HRG's shares have slipped by more than 25 per cent since the beginning of May after a dismal first-quarter trading update as consumers reined in spending in the run-up to the election.

Although the final moves will be based on Tuesday's closing prices and not confirmed until Wednesday, the two other Footsie stocks likely to fall into the FTSE 250 are telecoms firm Cable & Wireless Worldwide - subject of takeover gossip this week - and Invensys, which provides technology and software to oil refineries and power stations.

These are likely to be replaced by Glasgow-based engineering firm Weir Group, and Resolution, the investment vehicle of insurance guru Clive Cowdery, which owns Friends Provident and recently bought Axa's UK life business.

Engineering group Tomkins will also enjoy a short-lived spell in the top flight having agreed a 2.9 billion takeover last week. HRG will deliver its interim results on Thursday, a day after its demotion is expected to be confirmed.

The firm will reveal whether consumer sentiment is waning in its first update since the government's deficit-busting budget was announced.

The group, which has 747 Argos stores and 347 Homebase outlets, reported a bigger-than-expected slump in sales in the 13 weeks to 29 May, due to weak demand for video games and televisions.

HRG will be hoping for a bounce back from a dismal first quarter, which saw like-for-like sales down at Argos and Homebase, 8.1 per cent and 1.4 per cent respectively.

Online grocer Ocado is set to join the FTSE 250 following its float last month - despite cutting the value of its share offering - and will deliver its maiden trading update on Tuesday.

The update is expected to show sales growth momentum in the third quarter, after a 29 per cent leap in the first half.

Comments on plans to fight off increasing competition will be watched closely, as will signs on when it is likely to post its first profit - which it has yet to achieve since launch ten years ago.

Shares in the group, which has a delivery partnership with Waitrose, have been driven down since July's flotation. It was forced to slash the offer price to 180p after early hopes for as much as 275p as investors baulked at the initial 1.2 bn value put on the firm.

Shares slumped on the first day of trading and the stock has languished around 20 per cent lower since then, falling as low as 139p at one stage.

Morgan Stanley retail analyst Geoff Ruddell forecast more pain to come in a recent hard-hitting note. He slapped an 80p price target on the internet grocer, valuing it at less than half its IPO price, and warned its share of the online market is set to decline.

Ocado is facing stiff competition in the online space - Morrisons is expected to outline its plans to launch online when it reports interim results, while Amazon recently moved into the grocery sector. To add to concerns, its exclusive partner Waitrose is also working on plans to launch its own competing delivery operation within the M25 in two years.

But there is a lack of consensus on fortunes for the group, with analysts at Goldman Sachs - one of the banks that helped Ocado with its stock market debut - forecasting that shares should climb by 40 per cent within six months.

HSBC and UBS, which were also involved in floating Ocado, also believe shares will recover, although at a more modest pace.

The biggest casualty in the FTSE 250 is expected to be troubled social housing firm Connaught.

The company's shares have tumbled more than 90 per cent since a profit warning over spending cuts at the end of June - leaving it with a market value of just 24 million.

Other stocks currently set to be relegated to the small cap ranks include renewable energy firm Eaga, education whiteboard maker Promethean World, diamond producer Gem Diamonds and video games and consoles retailer Game Group.