the stock with the highest market capitalization in the replacement pool has at least twice the market capitalization of the index stock with the lowest market capitalization. When a better candidate is available in the replacement pool, which can replace the index stock i.e.
#NIFTY 50 INDEX FREE#
In such a scenario, the stock having largest market capitalization and satisfying other requirements related to liquidity, turnover and free float will be considered for inclusion. Compulsory changes like corporate actions, delisting etc. For this purpose, floating stock shall mean stocks which are not held by the promoters and associated entities (where identifiable) of such companies.Ī) A company which comes out with a IPO will be eligible for inclusion in the index, if it fulfills the normal eligiblity criteria for the index like impact cost, market capitalisation and floating stock, for a 3 month period instead of a 6 month period.Ī stock may be replaced from an index for the following reasons: This is the percentage mark up suffered while buying / selling the desired quantity of a security compared to its ideal price (best buy + best sell) / 2Ĭompanies eligible for inclusion in S&P CNX Nifty should have atleast 10% floating stock. Impact cost is cost of executing a transaction in a security in proportion to the weightage of its market capitalisation as against the index market capitalisation at any point of time. Selection of the index set is based on the following criteria:įor inclusion in the index, the security should have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations for a basket size of Rs. The constituents and the criteria for the selection judge the effectiveness of the index.
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