NSE’s Index Reshuffling!
What is an Index? What are the types of Indices?
A Market Index is a statistical tool that reflects the changes in the financial markets. These Indices are performance Indicators of a specific segment of the market or the market as a whole. Asset Allocation and Security selection are two components involved in creating an index.
There are different types of stock market indices based on the kind of stocks considered to create the index:
✅ Benchmark Indices like BSE Sensex and NSE Nifty
✅ Indices created based on Market Capitalization: BSE Midcap, BSE Smallcap
✅ Sector-specific indices like Nifty FMCG, Nifty Auto and many more.
Each Index created would have a specific:
🌟 Eligibility Criteria (Securities that come under a particular Index)
🌟 Index Methodology (Percentage allocation of securities in the Index-
🌟 Index Reconstitution (Reshuffling after a specific time period)
🌟 Index Rebalancing and Index Governance (Maintenance and Advisory)
Index Reconstitution in NSE:
NSE Indices are generally reconstituted semi-annually considering the past 6 months' data and Index Maintenance Sub-Committee (Equity) handles the replacement of stocks.
On September 1st, considering the past 6 months' data till July 31st, NSE has made the following changes:
Below attached is a pdf file shared by NSE regarding the latest index reconstitution.