NSEs Index Maintenance Sub-Committee meeting today; methodology revised for select Nifty indices inclusion

The NSE's Index Maintenance Sub-Committee is scheduled to meet on Wednesday, February 28, after market hours to review the constituents of various indices of the Nifty. The Index Maintenance Sub-committee takes all decisions on the addition or deletion of companies in any index.

“A meeting of the Index Maintenance Sub-Committee (Equity) of NSE Indices Limited will be held on February 28, 2024, after market hours to conduct a periodic review of stocks in various Nifty equity indices. A press release announcing changes in these indices shall be issued thereafter,” said NSE in a press release dated February 27.

The market anticipates that in the broader Nifty 50 index, Shriram Finance will replace UPL Ltd.

Methodology revised for inclusion in Nifty indices

Earlier this week, changes were made to the methodology of inclusion in the Nifty Midcap 50, Nifty Smallcap 50, and sectoral indices. 

For Nifty Midcap 50 and Nifty Smallcap 50, criteria laid down for Nifty Midcap 150 and Nifty Smallcap 250, respectively, will be required to be met. Further, in the case of Nifty Midcap 150 and Nifty Smallcap 250, free-float m-cap criteria will apply as against full market capitalisation.

Free float m-cap for the valuation of a company takes into account only those shares that are available for trading or are publicly held.

Further, for inclusion in the Nifty sectoral indices, the performance of companies in the F&O segment will be watched. Another factor that will be considered is the number of times a stock has hit the circuit limit in six months. The revised rule says that the concerned security will be eligible for inclusion in case the scrip has hit the circuit limit in less than 20 per cent of the total trading sessions. In the case of Nifty Midcap 50, a maximum of five changes are anticipated, while in the case of Nifty Smallcap 50, a maximum of 10 changes are expected.

Besides, for inclusion in the Nifty Midcap 50, the stock should be among the top 100 companies in the Nifty Midcap 150 index. Likewise, to be included in the Nifty Smallcap 50, the stock has to be present in the top 150 companies in the Nifty Smallcap 250 index. Additionally, for inclusion, two new criteria have been added: average daily turnover and average daily full m-cap of the last six months.