Major changes to the Nifty-50 and Nifty Next 50

5paisa Research Team 5paisa Research Team 12th December 2022 - 09:16 am

In its circular dated 24th February, the National Stock Exchange (NSE) announced key changes to the NSE Nifty-50 index and the NSE Nifty Next-50 index. In addition, the NSE also announced changes in the eligibility criteria of Nifty equity indices and the replacement of stocks in various indices. These changes in methodology will become effective from 31st March 2022. Let us first look at the key index changes announced by the NSE.

Key index changes announced by NSE

The Index Maintenance Sub-Committee - Equity of NSE Indices Limited, based on periodic deliberations has suggested the following changes to the existing stock indices.

The following company will be excluded from the Nifty 50 Index:
• Indian Oil Corporation Ltd (NSE Code – IOC)

In the place of IOC, the following company will be added to the Nifty 50 index:
• Apollo Hospitals Enterprises Ltd (NSE Code – APOLLOHOSP)

The following 6 companies will be excluded from Nifty Next 50 index:

•   Apollo Hospitals Enterprises Ltd (NSE Code – APOLLOHOSP)
•   Aurobindo Pharma Ltd (NSE Code – AUROPHARMA)
•   Hindustan Petroleum Corporation Ltd (NSE Code – HINDPETRO)
•   Indraprastha Gas Ltd (NSE Code – IGL)
•   Jindal Steel & Power Ltd (NSE Code – JINDALSTEL)
•   Yes Bank Ltd (NSE Code – YESBANK)

The following 6 companies will be included into the Nifty Next 50 index:

•   FSN E-Commerce Ventures Ltd (NSE Code – NYKAA)
•   Indian Oil Corporation Ltd (NSE Code – IOC)
•   Mindtree Ltd (NSE Code – MINDTREE)
•   One 97 Communications Ltd (NSE Code – PAYTM)
•   SRF Ltd (NSE Code – SRF)
•   Zomato Ltd (NSE Code – ZOMATO)

Let us now turn to the changes announced by the NSE with respect to the eligibility criteria pertaining to the inclusion of stocks in the various NSE equity indices.

Revision in the eligibility criteria for inclusion of stocks in NIFTY equity indices

Criteria

Existing criteria

Proposed criteria

Minimum listing history requirement in case of new listing and companies traded subsequent to scheme of arrangement for corporate events

Constituents should have a minimum listing history of 3 months.

A company which has undergone a scheme of arrangement for corporate event such as spin-off, capital restructuring etc is only considered eligible for inclusion in the index if the company has completed 3 calendar months of trading after the stock has traded on ex-basis subject to fulfilment of all eligibility criteria for inclusion in the index.

Constituents should have a minimum listing history of 1 calendar month on cut-off date.

A company which has undergone a scheme of arrangement for corporate events such as spin-off, capital restructuring etc is considered eligible for inclusion in the index if company has completed 1 calendar month of trading as on the cut-off date after the stock has traded on ex-basis subject to fulfilment of all eligibility criteria for inclusion in the index. The change in eligibility criteria would be applicable with immediate effect to all NIFTY equity indices which currently mandates requirement of minimum of 3 months of listing for inclusion in the index

It needs to be underscored here that the change in eligibility criteria would be applicable with immediate effect to all NIFTY equity indices which currently mandates requirement of minimum of 3 months of listing for inclusion in the index.

The detailed circular can be accessed on the NSE website at the following URL given below.

https://www1.nseindia.com/content/indices/ind_prs24022022_1.pdf