scorecardresearchNSE rebalancing: NSE rejigs stocks for its indices, changes criteria for inclusion

NSE rebalancing: NSE rejigs stocks for its indices, changes criteria for inclusion

Updated: 25 Feb 2022, 12:58 PM IST
TL;DR.

The rejig of Nifty components happens on a quarterly basis and takes place on the last trading day of March, June, September and December.

NSE is one of the largest stock markets in India. 

NSE is one of the largest stock markets in India. 

NSE on February 24 announced changes in the components of its various indices which will come into effect from March 31, 2022.

The rejig of Nifty components, popularly known as index rebalancing in market parlance, happens on a quarterly basis and takes place on the last trading day of March, June, September and December.

In the latest rejig, Indian Oil Corporation has been excluded from the Nifty50 index and Apollo Hospitals Enterprise has been included. RBL Bank has been removed from Nifty Bank and Bank of Baroda has been included. This will affect the inflow and outflow of the funds in these stocks.

“In Nifty50, Apollo Hospital will see an inflow of $143bn while Indian Oil will be removed and it will see an outflow of $91mn. Within Nifty Bank, Bank of Baroda will gain $53mn while RBL will see an outflow of $23mn” said Abhilash Pagaria, Head, Alternatives research, Edelweiss Securities.

The changes have been announced for various Nifty indices, including Nifty Next 50, Nifty 500, Nifty 100, Nifty Midcap 50 and Nifty Smallcap 50.

The changes have been done as NSE has revised the eligibility criteria for the inclusion of stocks in Nifty Indices.

As per the proposed eligibility criteria for Nifty indices, stocks should have a minimum listing history of one calendar month as on the cut-off date.

“The Index Maintenance Sub-Committee - Equity (IMSC) of NSE Indices Limited has decided to make the changes in the eligibility criteria of NIFTY equity indices. Now constituents should have a minimum listing history of one calendar month as on the cut-off date against the earlier requirement of three months. This has paved the way for stocks like Nykaa, Paytm, Policy Bazaar and Latent View which got listed after October 2021. From passive tracking perspective new criteria has helped Nykaa and Paytm to get included in Nifty Next 50” said Pagaria.

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First Published: 25 Feb 2022, 12:56 PM IST