After increasing the investor’s wealth by around 23-fold over the last 10 years, food and beverages company, Nestle India will soon be included in the National Stock Exchange (NSE). As a part of NSE’s periodic review, the index maintenance sub-committee of the exchange has decided to include Nestle India in the Nifty 50. Meanwhile, Indiabulls Housing Finance is set to be removed from the index, after losing 64 per cent in the previous year. The changes are expected to be effective from Sep 27, 2019, according to the NSE statement. The changes will also be applicable to the Nifty 50 Equal Weight Index.
Stock replacements in NIFTY 50 generally takes place from the first working day after F&O expiry of March and September. Adding to it, in case of any replacement in the index, a four weeks’ prior notice is given to the market participants.
The average age of a Nifty company has spiked to 43 years now from 38 in 1996. The NSE benchmark index comprises a higher number of older companies than what it had over two decades ago. Only a dozen companies are less than 25 years old in the current Nifty constitution. In 1996, this was 20. The age of a company is referred to the number of years since its incorporation.
In another major decision, ABB India, BHEL, MRF and SAIL are the companies that are being excluded from Nifty Next 50, whereas Berger Paints, Indiabulls Housing Finance, Power Finance Corporation and PNB are being included in the Nifty next 50.
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The inclusion of Nestle is expected to increase the weight of fast-moving consumer goods (FMCG) sector in the index by 94 basis points to 9.2 per cent, making it the second-largest contributor, after private banks.