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The National Stock Exchange (NSE) on Tuesday revised the index maintenance guidelines, criteria and methodology. (REUTERS)
The National Stock Exchange (NSE) on Tuesday revised the index maintenance guidelines, criteria and methodology. (REUTERS)

NSE announces changes in index maintenance guidelines; effective from 31 March

  • The calculation of price to earnings ratio for indices will be changed
  • Dividend yield % for indices will be calculated by taking into consideration total equity dividend of each company on rolling 12 months (calculated based on ex- dividend date) basis

The National Stock Exchange (NSE) on Tuesday revised the index maintenance guidelines, criteria and methodology. The changes will be effective from 31 March, 2021. "The Index Maintenance Sub-Committee (Equity) of NSE Indices Limited has decided to make changes," it said in a statement.

According to the new guideline, the replacement of stocks resulting from periodic index reconstitution will be implemented from the last working day (beginning of day) of March, June, September and December depending upon the review frequency as may be applicable for each index. At present, it is implemented from the first working day after F&O expiry of March, June, September and December

In case of capped indices, capping of stocks will be implemented from the last working day of March, June, September and December by taking into account closing prices as on T-3 basis, where T day is last working day of March, June, September and December. It is currently implemented from the first working day after F&O expiry of March, June, September and December by taking intoaccount closing prices as on T-5 basis.

Quarterly rebalancing of shares and investible weight factors will be implemented from the last working day of March, June, September and December. Currently, it from the first working day after F&O expiry of March, June, September and December.

The calculation of price to earnings ratio for indices will be changed. Price to earnings ratio (P/E Ratio) will be calculated by taking into consideration earnings (including profits and losses) reported by each index constituent in trailing 4 quarters. (consolidated financials). In case, consolidated financials are not available, standalone financials for trailing 4 quarters will be considered.

Dividend yield % for indices will be calculated by taking into consideration total equity dividend of each company on rolling 12 months (calculated based on ex- dividend date) basis.

In a separate release, the bourse said there will be replacements in 36 indices, including Nifty 50, from 31 March. The exchange's Index Maintenance Sub-Committee (Equity) decided to make replacements in the indices as part of its periodic review. In Nifty 50, Tata Consumer Products will replace GAIL from March 31.

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