Nifty India Consumption Index
The performance of the domestic consumer sector is tracked by the NIFTY India Consumption thematic index offered by the National Stock Exchange. The thirty equities in the portfolio span nine different sectors - FMCG, Auto and Auto Components, Consumer Durables, Telecom, Consumer Services, Power, Healthcare, among others.
On July 12, 2011, the NIFTY Consumption index was introduced, using January 2, 2006 as the base date and 1000 as the base value. Since its launch, the NIFTY India Consumption share price has surpassed 7,000 at nearly 35 x P/E multiples. It has a semi-annual reconstitution cycle and caps individual equities at 10% weight.
NSE Indices Limited, formerly India Index Services & Products Limited, is the owner and manager of the NIFTY India Consumption index. The Index Advisory Committee, the Index Maintenance Sub-Committee, and the Board of Directors of NSE Indices comprise the three-tier structure that oversees the India Consumption index.
The NIFTY India Consumption Total Returns Index is a variation of NIFTY India Consumption. This index can be used to benchmark fund portfolios and to introduce exchange-traded funds (ETFs), index funds, and other structured investment products.
How to Select Stocks for Inclusion in NIFTY India Consumption?
The NIFTY India Consumption share price is calculated by weighting its 30 stocks based on a regularly capped free-float market capitalization relative to a base market capitalization value in real-time.
The securities must meet the following conditions for eligibility:
- Should be listed on the National Stock Exchange.
- Should be part of the NIFTY 500.
- Should have at least ten stocks.
- If the number of eligible stocks falls below 10, the deficit number of stocks will be chosen from the universe of top 800 ranked stocks based on both average daily turnover and average daily full market capitalization data from the NIFTY 500 universe over the past six months.
- Should be part of the consumer sector.
- More than half of the business's revenues should originate from within the country; that is, not from exports.
- If the float-adjusted market capitalisation of a new security is at least 1.5 times that of the free-float market capitalisation of the smallest member in the index, the new security will be included.
- Must have traded at least 90% of the time throughout the previous six months.
- Must have a minimum of six months' worth of listing history.
- If a company passes the eligibility requirements above for a period of three months instead of six months, it can be classified as an IPO.
- Should follow the 10% cap when rebalancing if there is only one stock.
How to Calculate NIFTY India Consumption?
The formula used to compute the Nifty India Consumption index value is:
Index Value is equal to Base Free Float Market Capitalisation * Base Index Value / Current Index Market Capitalisation.
Whereas
Market Capitalisation of the Current Index = Shares o/s * IWF * Capping factor * Price
Reason it is based on the market capitalisation method, IWF (Investable Weight Factors) = 1
Every year on January 31 and July 31, the NIFTY India Consumption index is rebalanced twice in a year using data from six months. Effective as of the final trading day of March and September, any stocks in NIFTY India consumption index stocks will be replaced.
