The National Stock Exchange (NSE) on Tuesday introduced changes in index maintenance tips, criteria and methodology. From March 31, there will likely be changes to revision in the index reconstitution date, inventory capping, quarterly rebalancing of shares and investible weight elements, and calculation of Price to Earnings (P/E) ratio for indices.
There may even be changes to calculation of dividend yield per cent for indices.
According to a launch, the alternative of shares ensuing from periodic index reconstitution will likely be carried out from the final working day (starting of day) of March, June, September and December. This may even rely upon the overview frequency as could also be relevant for every index.
“In case of capped indices, capping of stocks will be implemented from the last working day of March, June, September and December by taking into account closing prices as on T-3 basis, where T day is last working day of March, June, September and December,” the discharge stated.
Further, quarterly rebalancing of shares and investible weight elements will likely be carried out from the final working day of March, June, September and December.
The change famous that P/E ratio will likely be calculated by making an allowance for earnings, together with earnings and losses, reported by every index constituent in trailing 4 quarters (consolidated financials).
“In case, consolidated financials are not available, standalone financials for trailing four quarters will be considered,” it added.
Further, dividend yield per cent for indices will likely be calculated by making an allowance for complete fairness dividend of every firm on rolling 12 months, calculated primarily based on ex-dividend date, foundation.
The change has additionally determined to revise the criteria for Nifty 100 index, methodology for Nifty Next 50 index and Nifty Financial Services, the discharge stated.
With respect to limits on most replacements per index overview, NSE stated no changes are being made to the prevailing 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 discharge stated.
In a separate launch, the bourse stated there will likely be replacements in 36 indices, together with Nifty 50, from March 31.
The change’s Index Maintenance Sub-Committee (Equity) determined to make replacements in the indices as a part of its periodic overview.
In Nifty 50, Tata Consumer Products will substitute GAIL from March 31.
As per the discharge, 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.