UK insurer Direct Line and electronics goods retailer Dixons Carphone - formed by a merger between Dixons and Carphone Warehouse - are to be promoted into Britain's benchmark FTSE 100 equity index. 

The changes were announced by FTSE Group yesterday and will take effect when trading begins on September 22. 

While Direct Line and Dixons Carphone were elevated into the top ranks, housebuilder Barratt Developments and drinks can maker Rexam were relegated from the FTSE 100 into the mid-cap FTSE 250. 

The rankings are decided on market capitalisation. Companies with the lowest market cap in the FTSE100 drop into the FTSE250 and companies with the highest market cap on the FTSE250 replace them. 

Direct Line has a current market capitalisation of around £4.5 billion while Dixons Carphone's market capitalisation stands at just over £4 billion. 

Getting into the FTSE 100 can often fuel further demand for a company's shares, since funds that track the FTSE or invest in the index can then add that stock to their portfolio.