How Does the NSE select stocks to be included in the S&P CNX Nifty?

Subscribe to GoodReturns
For Quick Alerts
For Daily Alerts

    It's never an easy proposition to include and exclude stocks from the indices. In India the S&P CNX Nifty has become an important gauge for reflecting how the stock markets are performing. Along with the BSE Sensex it is the most important benchmark for the stock market in India.

    How Does the NSE select stocks to be included in the S&P CNX Nifty?
    But, the question always arises as to how stocks are included in the index. The S&P CNX NSE Nifty is managed by a team at IISL. There is a three-tier governance structure comprising the Board of Directors of IISL, the Index Policy Committee, and the Index Maintenance Sub-Committee.

    Under these the S&P CNX Nifty is managed and steps are taken that the 50 best companies based on various parameters are selected.
    How are stock selected?

    The team at IISL looks at the following:

    a) Market impact cost
    Market impact is one the important parameters based on the liquidity of a stock. For a company to be considered for inclusion in the CNX Nifty, it should have traded at an average impact cost of 0.50 per cent or less during the last six months for 90 per cent of the observations.

    b) The company should have at least a 10 per cent investable weight factor.

    c) The company should have been listed in the past six months to be considered as a Nifty constituent.

    d) A company which comes out with an IPO will be considered in three months time, provided that it fulfils other criteria.


    The S&P CNX Nifty has become one of the most important benchmarks for knowing where the stock markets in the country are headed. The IISL follows a very sound strategy in determining which companies should be shunted out and which companies should be included in the Nifty.

    Read more about: nifty
    Story first published: Tuesday, December 30, 2014, 13:14 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    Get Latest News alerts from Goodreturns

    Notification Settings X
    Time Settings
    Clear Notification X
    Do you want to clear all the notifications from your inbox?
    Settings X
    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more