NSE To Make Changes In Index Maintenance Guidelines

The NSE (National Stock Exchange) on Tuesday announced changes in index maintenance guidelines, criteria and methodology. The changes will be related to revision in the index reconstitution date, stock capping, quarterly rebalancing of shares and investable weight factors, calculation of Price to Earnings (P/E) ratio for indices, and calculation of dividend yield per cent for indices.

According to a release, the replacement of stocks resulting from periodic index reconstitution will be implemented from the last working day (beginning of day) of March, June, September and December. This will also depend on the review frequency as may be applicable for each index.

Further, quarterly rebalancing of shares and investable weight factors will be implemented from the last working day of March, June, September and December.

The exchange noted that the P/E ratio will be calculated by taking into consideration earnings, including profits and losses, reported by each index constituent in trailing four quarters (consolidated financials).

"In case, consolidated financials are not available, standalone financials for trailing four quarters will be considered," it added.

Dividend yield per cent for indices will be calculated by taking into consideration total equity dividend of each company on rolling 12 months, calculated based on ex-dividend date basis.

The exchange has also decided to revise the criteria for Nifty 100 index, methodology for Nifty Next 50 index and Nifty Financial Services, the release said.

With respect to limits on maximum replacements per index review, NSE said no changes are being made to the existing limits.

"Additionally, the existing limits on replacement will not be applicable for exclusion of stocks on account of stocks not meeting the minimum eligibility criteria," the release said.

In a separate release, the bourse said there will be replacements in 36 indices, including Nifty 50, from March 31. The exchange's Index Maintenance Sub-Committee (Equity) decided to make replacements in the indices as part of its periodic review.

In Nifty 50, Tata Consumer Products will replace GAIL from March 31.

As per the release, no changes are being made to Nifty Auto, Energy, FMCG, Pharma, Aditya Birla Group, Mahindra Group, Tata Group and Tata Group 25 per cent Cap indices.