S&P CNX Nifty is a well-diversified 50 stock
index accounting for 25 sectors of the economy.
S&P CNX Nifty
S&P CNX Nifty is a well-diversified 50 stock
index accounting for 25 sectors of the economy. It is used for a variety
of purposes such as benchmarking fund portfolios, index based
derivatives and index funds. The base date selected for calculation of
Nifty is November 3, 1995. The base value of the index is 1000 and it
has a base capital of Rs.2.06 trillion.
Nifty is owned and managed by India Index Services and Products Ltd.
(IISL), which is a joint venture between NSE and CRISIL. IISL has a
consulting and licensing agreement with Standard & Poor's (S&P),
who are world leaders in index services.
S&P CNX Nifty is based upon solid economic research. The index is
calculated using market capitalization weighted method. A trillion
calculations were expended to evolve the rules inside the S&P CNX
Nifty index. The criteria evolved is: (i) stocks considered for the S&P
CNX Nifty must be liquid by the "impact cost" criterion, (ii)
the largest 50 stocks that meet the criterion go into the index.
Stock Selection Criteria for S&P CNX Nifty
- The stock should have traded at an average impact cost of 0.50%
or less during the last six months for 90% of the observations for a
basket size of Rs. 2 Crores. Impact cost is cost of executing a
transaction in a security in proportion to the weightage of its
market capitalisation as against the index market capitalisation at
any point of time.
- For inclusion in S&P CNX Nifty companies should have atleast
10% floating stock. Floating stocks are those stocks which are not
held by the promoters of the companies.
- A company which comes out with a IPO will be eligible for
inclusion in the index, if it fulfills the eligiblity criteria for
the index like impact cost, market capitalisation and floating stock
for a 3 month period
