Stocks of various Nifty indices are going to witness a replacement soon. The immediate impact will be seen in the index funds as they have to hold the same set of stocks in the same proportion as that of the index it tracks. The portfolio of index funds tracking the different Nifty indices will see a change and as an investor of those mutual fund schemes you may want to be aware of the underlying stocks of your investments in funds.
The Index Maintenance Sub-Committee – Equity (IMSC) of NSE Indices Limited has decided to make the changes in eligibility criteria of NIFTY equity indices and replacement of stocks in various indices as part of its periodic review.
These changes shall become effective from March 31, 2022 (close of March 30, 2022).
There are two-fold changes that an investor needs to make note of – One, there is a revision in the eligibility criteria for inclusion of stocks in NIFTY equity indices and secondly, some stocks have been excluded while others have been included in the indices.
Currently, stocks need to have a minimum listing history of 3 months to be included in the index. Going forward, the stock needs to have a minimum listing history of 1 calendar month as on the cut-off date. The change in eligibility criteria would be applicable with an immediate effect to all NIFTY equity indices which currently mandates a requirement of minimum of 3 months of listing for inclusion in the index.
As far as replacement of stocks is concerned, the changes will reflect in the various Nifty indices such as Nifty 50, Nifty Next 50, NIFTY Smallcap 100, NIFTY Smallcap 50, NIFTY Midcap 100, NIFTY Midcap 50, NIFTY Midcap Select, NIFTY Smallcap 250, NIFTY Midcap 150, NIFTY 100 NIFTY 500 amongst others.
Some of the prominent inclusions and exclusions will be :
In Nifty 50, Indian Oil Corporation Ltd. Will be excluded while Apollo Hospitals Enterprise Ltd. Will be included.
The following will be excluded from Nifty Next 50
Apollo Hospitals Enterprise Ltd.
Aurobindo Pharma Ltd.
Hindustan Petroleum Corporation Ltd.
Indraprastha Gas Ltd.
Jindal Steel & Power Ltd.
Yes Bank Ltd.
The following will be included in Nifty Next 50
FSN E-Commerce Ventures (NYKAA)
Indian Oil Corporation (IOC)
One 97 Communications (PAYTM)
Similarly, the list of stocks in all other Nifty equity indices will see a revamp soon. As an investor in Nifty 50 or Nifty Next 50 index funds or any other index fund, if you want to know which stocks have been replaced, knowing about the new change will help.