Nifty is the market index that has been introduced by National Stock Exchange and this is a blended word of the National Stock Exchange and 50 stocks coined by NSE on April 20, 1996. Nifty50 is a benchmark-based index that is under the flagship of NSE and helps in showcasing the top 50 equity companies and stocks traded into the stock exchange out of a total of 1600 stocks. These stocks are expected across different kind of sectors of the Indian economy for example information technology, media and entertainment, consumer goods, financial services, metals, pharmaceuticals, cement, telecommunication, automobiles, fertilisers, energy, pesticides and several other kinds of services as well.
Nifty is one of the two national indices of India and the other one is the Sensex which is the product of the Bombay Stock Exchange. It is owned by India Index Services and Products which is a fully owned subsidiary of the National Stock Exchange Strategic Investment Corporation Limited. Nifty 50 follows different kinds of patterns and trends of the blue-chip companies which are the most liquid and largest Indian securities and it will contain a host of indices under it that are capable of dealing with futures and options along with derivatives of the NSE.
The eligibility criteria for nifty index listing have been mentioned as follows:
- The company must be a domicile of India and it should be registered under the National Stock Exchange.
- The stocks must possess the right kind of liquidity which is measured by the average impact cost and the cost of security transaction execution concerning the index weight through the capitalisation. It should be 0.50% or lower than that for six months where 90% of the observations are made on the portfolio of Rs.10, crores.
- The company should also have a trading frequency of a hundred per cent during the previous six months.
- It should come with average free-floating market capitalisation which is 1.5 times higher than the smallest constituent in the whole index.
- Shares which have different kinds of voting rights are also eligible for the index.
The nifty index is reconstituted after every six months and is based upon considering the performance of the stock over such a period. Depending upon the performance and the given company which is fulfilling the eligibility criteria as mentioned above it might include or eliminate new or old stocks respectively. In the cases any new elimination or addition are done the companies in question will be informed through a notice four weeks before the reconstitution. After the periodical routine, the reconstitution can also be undertaken in case the company goes through a scheme of arrangement through different kinds of points. The nifty share market index is the benchmark standard against which all the equity markets in India are measured. Hence, NSE is the only one that is conducting regular index maintenance to ensure that everything is stable and the benchmark is persisted. Hence, depending upon the companies like 5paisa in the industry is a great idea because such companies come with top-notch quality advantages for the investors and help in making sure that they can fulfill their overall goals very easily.
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