Cairn's share price has surged since the beginning of the year

Its shares have almost quadrupled in value since the start of the year, jumping to 1,488 pence by Wednesday's close.

The firm will replace mortgage lender Bradford & Bingley in the index. Cairn, which focuses on South Asia, was a relative unknown until recently and will now be trading in the same index as industry giants Shell and BP.

The company has little to be shy about and on Tuesday revealed that profits rose by 40% in the first half of 2004.

Even so, its pre-tax profit of �22.4m ($40m) is dwarfed by the multi-billion pound earnings that Shell and BP manage to book.

Other companies affected by the FTSE's quarterly changes are Halfords, Premier Foods and Virgin Mobile Holdings, all of which have gone into the FTSE 250 index.

They are taking the place of Vardy, Eurotunnel and Xansa.