S&P CNX Nifty Index (NSEI)

The Hindu Business Line  Oct 1  Comment 
Nifty October Futures (7,988) The Nifty futures contract is volatile today. The contract failed to sustain higher after opening with a gap-up at 8,034. It fell from the high of 8,037...
The Economic Times  Oct 1  Comment 
he 50-share Nifty index is expected to open higher on Thursday following positive trend seen in other Asian markets.
The Hindu Business Line  Sep 30  Comment 
Nifty October Futures (7,915) The Nifty futures contract was range-bound and was trading on a positive note on Wednesday. The contract fell below 7,900 initially but reversed higher immed...
The Economic Times  Sep 30  Comment 
Tracking the momentum, the Nifty index may reclaim its crucial psychological level of 7,850 in trade today.
The Hindu Business Line  Sep 28  Comment 
Nifty Futures: Initiate fresh short position with a stop-loss at 7835 if the Nifty Futures contract breaks below 7,800. HDFC Bank: Initiate fresh long position only...
The Hindu Business Line  Sep 28  Comment 
Nifty October Futures (7,892) Trading in Nifty futures contract has been giving out mixed signals today. After opening at 7,890.15, the contract slipped about 40 points. But the f...
The Economic Times  Sep 28  Comment 
Tracking the momentum, the Nifty index may retest its crucial psychological level of 7,850-7,800 in trade today.
The Hindu Business Line  Sep 24  Comment 
Nifty September Futures (7,832) The Nifty futures contract is trading choppy and range-bound on the monthly expiry day today. A breakout on either side of 7,800-7,850 will decide t...
The Economic Times  Sep 23  Comment 
Tracking the momentum, the Nifty index may retest its crucial psychological level of 7,800-7,750 in trade today.
The Hindu Business Line  Sep 22  Comment 
Nifty September Futures (7,989) Although, the Nifty futures contract started the session on a positive note with a gap up opening at 8,011, the contract failed to sustain its gains...


The S&P CNX Nifty is the headline index on the National Stock Exchange of India Ltd. (NSE). The S&P CNX Nifty tracks the behavior of a portfolio of blue chip companies, the largest and most liquid Indian securities. It includes 50 of the approximately 935 companies listed on the NSE, captures approximately 60% of its equity market capitalization and is a true reflection of the Indian stock market.

The S&P CNX Nifty covers 22 sectors of the Indian economy and offers investment managers exposure to the Indian market in one efficient portfolio. The index has been trading since April 1996 and is well suited for benchmarking, index funds and indexbased derivatives.

NSE Index, also called the Nifty is the benchmark index for large cap companies by amount of liquidity on the National Stock Exchange in India. It covers 25 sectors of the Indian economy, 50 of the most liquid blue chip stocks and covers 60% of the total market capitalization of the NSE[1].


The S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between the NSE and CRISIL. IISL is India’s first specialized company focused on the index as a core product. IISL has a licensing and marketing agreement with Standard & Poor’s, who are world leaders in index services.


The S&P CNX Nifty is a diversified 50 stock, market-capitalization-weighted index for India, accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.

The S&P CNX Nifty is based on solid economic research and is created for those interested in investing and trading in Indian equities.

Market Representation

The S&P CNX Nifty stocks represent about 60% of the total market capitalization of the National Stock Exchange (NSE).


The S&P CNX Nifty is a diversified index, accurately reflecting overall market conditions. The reward-to-risk ratio of S&P CNX Nifty is higher than other leading indices, making it a more attractive portfolio, hence offering similar returns, but at lesser risk.


Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for possible inclusion in the S&P CNX Nifty, it has to reliably have market impact cost below 0.75 %, when doing S&P CNX Nifty trades of five million rupees (Rs). The current impact cost of the S&P CNX Nifty for a portfolio size of Rs 5 million is 0.07%.

Hedging Effectiveness

The basic risk of the S&P CNX Nifty futures will be lower, compared to other index portfolios, owing to the superior liquidity of the S&P CNX Nifty constituent stocks and of the NSE. The S&P CNX Nifty has higher correlations with typical portfolios in India, compared to other indices. These two factors imply that hedging using S&P CNX Nifty futures is superior.

Index Family- S&P CNX Defty

The S&P CNX Defty is a U.S. dollar-denominated index based on the S&P CNX Nifty. This index has been developed to provide a benchmark to the international investors, providing them with an instrument for measuring returns on their equity investment in dollar terms. While the underlying S&P CNX Nifty is calculated in Indian rupees, the S&P CNX Defty is calculated and denominated in U.S. dollars. This ensures that the risk arising out of currency fluctuation is covered through the S&P CNX Defty.

Weighting and Calculations

Like most S&P indices, the Nifty is a market capitalization weighted index based on the free float method. They involve the total market capitalization of the companies weighted by their effect on the index, so the larger stocks would make more of a difference to the index as compared to a smaller market cap company. The basic formula for any index is (be it capitalization weighted or any other stock index)[2]:

  • Index level= Σ(Price of stock * Number of shares) * Free float adjustment factor/ Index divisor

The Free float adjustment factor represents the proportion of shares that is freefloated as a percentage of issued shares and then its rounded up to the nearest mulitple of 5% for calculation purposes. To find the free-float capitalization of a company, first find its market cap (number of outstanding shares x share price) then multiply by its free-float factor. The free-float method, therefore, does not include restricted stocks, such as those held by company insiders.

While one might track this portfolio’s value in dollar terms, it would probably be an unwieldy number – for example, the S&P 500 market value is roughly $11.8 trillion. Rather than deal with ten or more digits, the figure is scaled to a more easily handled number, currently around 1250. Dividing the portfolio market value by a factor, usually called the Index divisor, does the scaling.

Continuity in index values is maintained by adjusting the divisor for all changes in the constituents’ share capital after the base date. This includes additions and deletions to the index, rights issues, share buybacks and issuances, and spin-offs. The divisor’s time series is, in effect, a chronological summary of all changes affecting the base capital of the index. The divisor is adjusted such that the index value at an instant just prior to a change in base capital equals the index value at an instant immediately following that change[3].



For companies to be eligible for the Nifty, they need to satisfy the following criteria as per the S&P rules[4]:

  • Liquidity: Liquidity is measured by impact cost of the company on the index. Each company must have traded at an average impact cost of 75% or less for the preceding six months for 90% of the trades. Impact cost measures the difference between the ideal selling price of a security and the actual price. This is the percentage mark up suffered while buying/selling the desired quantity of a security compared to its ideal price -- (best buy best sell)/2. The more liquid a security, the greater the chance that its shares trade at prices close to the ideal price. Highly liquid securities have very low impact cost.
  • Market Capitalization:Each company must have a market capitalization equal to or exceeding Rs. 5 billion for the preceding six months.
  • Public Float: Each company must have at least 12% of it outstanding shares available for public trading.
  • Domicile: The company must be domiciled in India and trade on the NSE.
  • Securities: Convertible stock, bonds, warrants, rights, and preferred stock that provide a guaranteed fixed return are not eligible.

List of companies

The composition of the Nifty 50, as of November 24th, 2009[5]: (listed in the descending order of tentative market cap)

A B B Limited (ABB.BO) Capital Goods
ACC Limited (ACC-BY) Cement
Ambuja Cements Ltd Cement
Axis Bank Banking
Bharat Heavy Electricals Limited (500103-BY) Capital Goods
Bharat Petroleum Corporation Ltd Oil Marketing
Bharti Airtel Ltd (BHARTIARTL-BY) Telecommunications
Cairn Energy Oil & Gas Drilling & Exploration
Cipla Ltd Pharmaceuticals
DLF Ltd. Real Estate Development
GAIL (India) Ltd Oil & Gas Refining

HCL Technologies Information Technology Services
HDFC (HODFI-BY) Real Estate
HDFC Bank (HDB) Banking
Hero Honda Motors Ltd Auto Makers
Hindalco Industries Ltd.(HINDALCOSL-BY) Metals and Mining Industry
Hindustan Unilever Ltd.(HUL-BY) Fast Moving Consumer Goods (FMCG)
Idea Cellular Telecommunications
Infrastructure Development Finance Company Limited [[]]

Infosys Technologies (INFOSYS-BY) Information Technology Services
ITC Ltd (ITCSL-BY) Fast Moving Consumer Goods (FMCG)
Jindal Steel & Power Ltd Capital Goods

Jaiprakash Associates Limited Capital Goods

Larsen & Toubro Ltd.(LNT-BY) Capital Goods
Mahindra & Mahindra Ltd (MNM-BY) Auto Makers
Maruti Suzuki India Ltd (532500-BY) Auto Makers
National Thermal Power Corporation Ltd. (NTPC-BY) Energy
Oil and Natural Gas Corporation (ONGCSL-BY) Oil & Gas Drilling & Exploration
Power Grid Corporation of India Energy
Punjab National Bank Banking
Ranbaxy Laboratories Ltd. (RANBAXY-BY) Pharmaceuticals
Reliance Communications (532712-BY) Telecommunications
Reliance Industries Limited (RELIANCE-IN) Conglomerates
Reliance Infrastructure Ltd.(RELINFRA-BY) Energy
Reliance Power Energy
Reliance Capital Ltd (BOM:500111) Financal
Siemens AG (SI) Capital Goods
State Bank of India (SBI-BY) Banking
Steel Authority of India Limited (500113-BY) Metals and Mining Industry
Sterlite Industries (India) Ltd. (STERLITEIND-BY) Metals and Mining Industry
Sun Pharmaceutical Industries Ltd Pharmaceuticals
Suzlon Energy Limited (532667-BY) Hybrid and Alternative Energy Technology
Tata Consultancy Services (TCS-BY) Information Technology Services
Tata Motors (TTM) Auto Makers
Tata Power Company Ltd. (TATAPOWERSL-BY) Energy
Tata Steel Limited (TATASTL-BY) Metals and Mining Industry
Unitech Real Estate Development
Videsh Sanchar Nigam (VSL) (now renamed to Tata Communications Ltd) Telecommunications
Wipro Limited (WIPRO-BY) Information Technology Services


  1. S&P Nifty Factsheet
  2. Capitlization method methodology
  3. Capitalization Weighted Description
  4. Nifty Methodology
  5. NSE India Nifty Watch
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