The Nifty Pharma Index, found on the National Stock Exchange of India (NSE), is a sectoral index that mirrors the pharmaceutical sector's performance in the Indian stock market. It consists of companies engaged in the production, promotion, research, and advancement of pharmaceutical products. The primary industries qualified for inclusion in the NIFTY Pharma index stocks list are those related to Biotechnology and Pharmaceuticals.
The NIFTY Pharma index commenced on July 1, 2005, using January 1, 2001, as the base date and 1000 as the base value. Since its inception, the NIFTY Pharma share price NSE has surpassed 12,000 at approximately 36 P/E multiples. It undergoes semi-annual reconstitution to accurately mirror the evolving dynamics of the Indian healthcare industry.
Features of the Nifty Pharma Index
The following are the features of the Nifty Pharma Index live:
Market Capitalisation:
It comprises the biggest and most easily traded pharmaceutical firms listed on the NSE, mirroring the market dynamics of the sector.
Diversification:
The index covers a broad spectrum of pharmaceutical companies, including both large corporations and niche specialized firms.
Calculation Methodology
The calculation utilizes the free-float market Capitalisation approach, taking into account the market value of shares that are freely tradable.
Base Value:
The nifty pharma index live is based on April 01, 2005, with an initial value of 1000.
Eligibility Criteria for Inclusion in the Nifty Pharma Index
Following is the eligibility criteria for the inclusion in the Nifty Pharma Index:
- Companies must be listed on the National Stock Exchange of India (NSE).
- According to the Industry Classification Benchmark (ICB), companies should be categorized within the pharmaceutical sector.
- According to NSE guidelines, companies in the pharmaceutical sector must have a minimum market capitalization to demonstrate their significance as key players in the industry.
- Businesses are required to maintain a minimum average daily turnover and trading volume over a specified period to ensure they are liquid and actively traded.
- A significant portion of the company's shares must be in free float, meaning they are available for trading and not held by insiders or promoters.
How is the Nifty Pharma Index calculated?
Using the free-float market Capitalisation method the Nifty Pharma Index is calculated. Under the Free-Float Market Capitalisation, only the shares that are available for public trading are considered, excluding promoter and government holdings.
Here is the formula for calculation: Stock Price × Number of Publicly Traded Shares
To calculate the index value you can use the formula given below:
Index Value= Base Market Capitalisation /Current Market Capitalisation × Base Index Value
How to Invest in Nifty Pharma?
The following are the methods to invest in Nifty Pharma Share Price:
- ETFs: Buy units of Nifty Pharma ETFs through a stockbroker.
- Index Funds: Invest in mutual funds tracking Nifty Pharma via fund houses.
- Stocks: Purchase individual stocks of Nifty Pharma companies.
- Derivatives: Trade Nifty Pharma futures and options if experienced.
