Nifty rejig in October: Godrej Consumer, JSW Steel may be included; Lupin, HPCL likely to exit

IDBI Capital

The index represents 50 companies selected from the universe of NIFTY 100 based on free-float market capitalisation and liquid companies having average impact cost of 0.50 percent or less for 90 percent of the observations for a basket size of Rs 10 crore. The constituents should have derivative contracts available on NSE.

The Nifty broadbased indices are reviewed twice every year based on six month data ending January 31 and July 31. Eligibility criteria for newly listed security are checked based on the data for a three month period instead of a six month period.

At the time of index reconstitution, a company which has undergone a scheme of arrangement for corporate event such as spin-off, capital restructuring etc. would be considered eligible for inclusion in the index if as on the cut-off date for sourcing data of preceding six months for index reconstitution, a company has completed three calendar months of trading period after the stock has traded on ex. basis subject to fulfilment of all eligibility criteria for inclusion in the index.

The Nifty Indices are computed using a float-adjusted weighted market capitalisation methodology. The methodology also takes into account constituent changes in the index and corporate actions such as stock splits, rights issuance, etc, without affecting the index value.

Eligibility criteria for selection of constituent stocks:

It meets the impact cost criteria and free-float market capitalisation is 1.5 time. The free-float market capitalisation of the smallest constituent in the Nifty.

As mentioned in the below table, Lupin and HPCL are likely candidates for exclusion from the Nifty.



As mentioned on the above table, Godrej Consumer Products and JSW Steel are likely candidates for inclusion in the Nifty.

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Original Source: https://www.moneycontrol.com/news/business/markets/nifty-rejig-in-october-godrej-consumer-jsw-steel-may-be-included-lupin-hpcl-likely-to-exit-2694451.html