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How is CNX NIFTY closing price calculated?

By Super
How is CNX NIFTY closing price calculated?
CNX Nifty, an index of 50 stocks listed on the NSE, is a well-diversified benchmarking index that accounts for as many as 22 sectors of the economy. Owned as well as administered by India Index Services and Products Ltd. (IISL) i.e. a joint venture of NSE and CRISIL, the index reflects the price movement of blue chip stocks deemed to be the most liquid and largest securities in terms of market capitalization. The index that emerges as a tool for benchmarking is also ideal for index-based derivatives and index funds.

It may be of interest for the stock-market enthusiasts to know how the closing prices for the CNX Nifty decided or computed on a day to day basis at the end of every trading day. Thus, in order to add-on to their knowledge base we hereby put forth the methodology in which the closing price for the index is computed.

The computation of the CNX Nifty closing price is done by taking the weighted- average closing prices of the stocks that constitute the index during the last half an hour i.e. from 3:00 pm to 3:30 pm for every trading session. Furthermore, the process for computation of closing price of the benchmarking index of the Bombay Stock Exchange i.e. SENSEX is also similar.

For instance, if the NIFTY index during the last half an hour of the trading session hovers between 5000-5050 then in such a case closing price of the NIFTY is taken as 5025 i.e. the average of 5000 and 5050.

In cases,when the constituents of the NIFTY index have not traded in the last half an hour of a trading session, the last price recorded on the exchange is taken for the computation of the NIFTY closing price. Likewise, in a scenario, when one or more of the stocks forming part of the index have not recorded any trading throughout the day then the closing price of the previous day is included for the calculation of the index closing price.


Rational of the used methodology

The methodology used in the computation of the closing price of the CNX NIFTY index inhibits any intentional changes in the index closing value.

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