Expect inclusion of Adani Enterprises and exclusion of Shree Cement from the NIFTY50 index in the Sep-2022 Semi-Annual Review: IIFL Capital Services

28 Jun 2022 , 11:26 AM

Based on IIFL Capital Services’ working of NIFTY50 index selection methodology, they expect inclusion of Adani Enterprises (ADE) and exclusion of Shree Cement (SRCM) from the NIFTY50 index in the forthcoming September 2022 Semi-Annual Review.

The analysis covers ~80% of the required data set which they believe gives a fairly accurate outcome. The time period for analysis assumes lot of importance as was seen in the previous index review expectations (March 2022) where several predictions on street gyrated between inclusion of APHS/INFOE and exclusion of IOCL. Availability of sample of sufficient trading days will only improve the accuracy of prediction.

Inclusion of DMART in F&O can derail these expectations.

Analysts at IIFL Capital Services expect Index changes to be announced by third/fourth week of August 2022 and the same to be effective on September 30, 2022 (Adjustment on September 29, 2022).

NIFTY50 Semi Annual Review Expectations|September-2022

Remark	Name	Bloomberg Code	$ mn flows	Mn shares	Delivery	Volumes
Inclusion	Adani Enterprises	ADE	232	8.4	19x	4.1x
Exclusion	Shree Cement	SRCM	-95	-0.4	22x	7.7x

Source: NSE Indices, IIFL Alternative Research

Please note that this forecast is based on the criteria set by exchange for Index constituents’ inclusion/exclusion. Analysts at IIFL Capital Services do not rule out additional changes. Four weeks prior notice is given to the market participants.

Eligibility Criteria

Liquidity: For inclusion in the index, the security should have traded at an average impact cost of 0.50% or less during the past six months for 90% of the observations for portfolio of Rs10 crore.

Index criteria: Constituents of NIFTY100 Index shall form the universe for NIFTY50.

Float-adjusted market cap: Companies will be included if free-float market capitalization is 1.50x the free-float market capitalization of the smallest constituent in the respective index.

F&O criteria for stocks in NIFTY50: The stock must be available for trading in NSE’s Futures & Options segment.

Domicile: The company must be domiciled in India and traded (listed & traded and not listed but permitted to trade) on the NSE.

Trading frequency: The company’s trading frequency should be 100% for the past six months.