Constituent changes to key Indices of the NSE Nifty

The NSE family of indices are managed and monitored by the Index Committee, which regularly deliberates on the constituents of the various NSE indices and takes a call on whether any inclusions / exclusions are warranted. The idea is to ensure that the particular index is representative of the underlying theme. For example, Nifty 50 has to reflect the most liquid and largest companies in India. Similarly, thematic indices like consumption, digital, commodities as well as other sectoral indices have to also represent the sector or thematic as close to reality as possible.

Why do index changes matter? Most of the passive funds like index funds and index ETFs benchmark their portfolios to specific indices and an inclusion in an index means inflows by global ETFs into such benchmarked passive funds and exclusion means outflows from such stocks. The latest set of revisions are effective from 31st March 2023. But what are the types of changes done to indices?

Type of review-driven changes to indices

Here are some of the key changes to the different types of indices and the drivers for the same.

1. Replacement on account of the semi-annual review of broad market indices. A total of 15 broad indices will witness changes as part of the March 31st 2023 index changes
    

2. Replacement on account of semi-annual review of sectoral indices on the NSE. A total of 7 sectoral indices will see changes as part of the March 31st 2023 index changes
    

3. Replacement on account of the semi-annual review of thematic indices on the NSE. A total of 16 thematic indices will undergo changes as part of the March 31st 2023 index changes
    

4. Replacement on account of Annual review of Nifty Dividend Opportunities 50 Index on the NSE. A total of 1 such index will undergo changes as part of the March 31st 2023 index changes
    

5. Replacement on account of the semi-annual review of Nifty Growth Sectors 15 Index on the NSE
    

6. Replacement on account of the quarterly review of thematic indices on the NSE. A total of 2 such indices will undergo changes as part of the March 31st 2023 index changes.

Stock exclusions and inclusions in broad based indices

We cover just a cross section of important generic indices for the sake of understanding and exhibit the inclusions and exclusions from a cross section of key indices. What goes in and what goes out of the Nifty Next 50 index. There are a total of 5 changes here.

Let us now turn to what goes in and what goes out of the diversified Nifty 100 index. There are a total of 5 changes here.

Let us now turn to what goes in and what goes out of the diversified Nifty Midcap Select index. There are a total of 5 changes here.

Let us now turn to what goes in and what goes out of the Nifty Midcap 50 index. There are a total of 4 changes here.

Let us now turn to what goes in and what goes out of the diversified Nifty 200 index. There are a total of 9 changes here.

There are more such changes which can be reviewed in detail on the website of the NSE at the hyperlink provided at the end.

How the sectoral indices are likely to undergo change?

Here are some of the major changes to the key sectoral indices.

• Manappuram Finance goes out and Piramal Enterprises comes into the Nifty Financial Services Ex-Bank Index
   

• Gland Pharma goes out and Max Healthcare Services comes into the Nifty Healthcare Index
   

• MOIL Ltd goes out and NMDC Ltd comes into the Nifty Metals Index effective from the 31st of March 2023.
   

• Sunteck Realty goes out and Mahindra Lifespaces Developers Ltd comes into the Nifty Realty Index.

There are other sector-specific changes that can be checked on the NSE link provided at the end.

How the Thematic Indices are likely to undergo change?

Here are some of the major changes to the key thematic indices.

• Ramco Cements goes out and Adani Power comes into the Nifty Commodities Index, effective from 31st March 2023.
   

• GAIL India Ltd goes out and Coal India Ltd comes into the Nifty Energy Index, effective from 31st March 2023.
   

• RBL Bank Ltd goes out and Adani Power comes into the Nifty Housing Index, effective from 31st March 2023.
   

• Voltas Ltd goes out and Bajaj Auto Ltd comes into the Nifty India Consumption Index, effective from 31st March 2023.
   

• Honeywell Automation goes out and Affle India Ltd comes into the Nifty India Digital Index.
   

• Vodafone Idea Ltd goes out and CRISIL Ltd comes into the Nifty MNC Index, effective from 31st March 2023.
   

• National Aluminium Company Ltd (NALCO) goes out and NMDC Ltd comes into the Nifty PSE Index.
   

• Gujarat State Petronet Ltd (GSPL) goes out and Schaeffler India Ltd comes into the Nifty Mobility Index.

For the detailed NSE circular changes in the various NSE indices effective from 31st March 2023, the relevant circular can be downloaded from the link below…

https://static.nseindia.com/s3fs-public/2023-02/Replacements%20in%20indices%20w.e.f.%20March%2031,%202023.pdf

In case, you are unable to click and view the circular, the above link can be cut and pasted on the browser window.