What is Nifty?

What is the Nifty?

It is a diversified 50 stock index accounting for 12 sectors of the economy. This is owned and managed by India Index Services and Products. (IISL). IISL is India's specialised company focused upon the index as a core product.

How is the Nifty computed?

According to the NSE's website, the index is computed using free float market capitalization weighted method. Under this, the level of the index reflects the total market value of all the stocks in the index relative to a particular base period. The period in this case is the close of prices on November 3, 1995, which marks the completion of one year of operations of NSE's Capital Market Segment.

It must be noted that the method also considers constituent changes in the index and corporate actions such as stock splits, rights, etc without affecting the index value.

What is the criteria for selection of stocks?

Usually, it is based on the liquidity and other factors such as out of IPO period, replacement, among others.

NSE explains that… "For inclusion in the index, the security should have traded at an average impact cost of 0.50 percent or less during the last six months for 90 percent of the observations for a basket size of Rs 2 crore."

Other factors:

1. A stock could come under consideration once it has come out of an IPO, if it fulfils the parameters such as impact cost, market capitalisation and floating stock, for a 3- month period than 6-month period.

2. Availability for trading in the derivatives segment.

3. Replacement of stock

- Developments such as corporate actions, delisting, among others, could lead to a replacement of the stock. In this case, the stock with the largest free float market cap and satisfying other requirement related to liquidity, turnover and free float will be considered for inclusion, the portal added.

- When a better candidate is available in the replacement pool, which can replace the index stock i.e. the stock with the highest free float market capitalization in the replacement pool has at least twice the free float market capitalization of the index stock with the lowest free float market capitalization.

Does it mean bad news for the stock to be excluded?

Not necessarily. It could be a case where the parameters are changed for inclusion/exclusion in the Nifty and the stock could have performed steady. Having said that, in the news development from Monday, these companies were underperformers.

Can companies make a comeback on the index?

Yes. They can. If there is a sustained healthy performance in the stock along with increasing market capitalisation, then such stocks can make a comeback, subject to fulfilment of other criterion mentioned above.

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

Top 10 Tax Saver Mutual Funds for 2018

Best 10 ELSS Mutual Funds to Invest in India for 2018

1. DSP BlackRock Tax Saver Fund

2. Tata India Tax Savings Fund 

3. Birla Sun Life Tax Relief 96

4. ICICI Prudential Long Term Equity Fund

5. Invesco India Tax Plan

6. Franklin India TaxShield 

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Sundaram Diversified Equity Fund

Invest in Best Performing 2018 Tax Saver Mutual Funds Online

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300