Nifty Oil and Gas Index
NIFTY Oil & Gas is a sectoral index on the National Stock Exchange (NSE) that tracks the behavior and performance of India's petroleum industry in real-time. It is made up of 15 NSE-listed stocks that are involved in a variety of oil, gas, and petroleum product-related sectors.
The following industries are eligible for inclusion in the NIFTY Oil & Gas index: Gas Transmission/Marketing, Industrial Gas, LPG/CNG/PNG/LNG Supplier, Lubricants, Offshore Support Solution Drilling, Oil Equipment & Services, Oil Exploration & Production, Oil Storage & Transportation, Refineries & Marketing, and Trading - Gas.
History of Nifty Oil and Gas
Launched on January 15, 2020, the NIFTY Oil & Gas index has a base date of April 1, 2005, and a base value of 1000. Since its launch, the NIFTY Oil & Gas share price has surpassed 7,500 at roughly 8x P/E multiples. It caps the weightage of individual equities at 33% and is rebuilt semi-annually.
NSE Indices Limited, formerly India Index Services & Products Limited, is the owner and manager of the NIFTY Oil & Gas index. The NSE Oil & Gas index is managed by a tripartite hierarchy consisting of:
- The NSE Indices Board of Directors is in charge of managing the index by a specific framework.
- The Index Advisory Committee (Equity) is in charge of offering advice on macroeconomic problems relating to the index.
- The Index Maintenance Sub-Committee is in charge of maintaining the index's methodology and stock selection criteria.
Criteria to Select Stocks for NIFTY Oil & Gas
To be eligible for inclusion in the NIFTY Oil & Gas index, the securities must meet the following eligibility requirements:
- The stock should be listed on the National Stock Exchange.
- It should be part of the NIFTY 500.
- It should work in the oil, gas, and petroleum industries.
- 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.
- The stock should have traded at least 90% in the last six months.
- It should have at least six months of listing history.
- New securities will be included if their float-adjusted market capitalization exceeds 1.5 times that of the index's smallest constituent's free-float market capitalization.
- A recently listed firm (IPO) may be included if it meets the aforementioned qualifying criteria for three months rather than six.
- Should stick to the cap of 33% for a single stock and 62% for the top three stocks cumulatively when rebalancing.
How to Calculate NIFTY Oil & Gas?
The NIFTY Oil & Gas share price is calculated by weighting its 15 stocks based on a regularly capped free-float market capitalization relative to a base market capitalization value in real time.
Below is the formula to compute the index value:
Index Value = Current Index Market Capitalization/(Base Free Float Market Capitalization x Base Index Value)
The NIFTY Oil & Gas index is rebalanced twice in a year using six months of data, with cutoff dates of January 31 and July 31 of each year. The replacement of NIFTY oil and gas stocks (if any) takes effect on the final trading day of March and September.
