Technical Analysis of Indian Equities by Nooresh

Nifty Calculator January 2017 – Will Vedanta and IOC replace Idea and Bhel in Nifty ?

Nifty Calculator  ( Download from below link)

Nifty Calculator - Weightages as per 30th December 2016.

Nifty Calculator January 2017


Quick Observations

Top 10 stocks = 52.8% of Nifty        This has seen a shift from 55-56% a few years back.

Top 20 stocks = 72.76% of Nifty       This has seen a shift from 75-78%

Top 5 stocks = HDFC Bank Ltd,I T C Ltd,  Infosys Ltd, Housing Development Finance Corporation Ltd, Reliance Industries Ltd. measure up to 34.14% of Nifty.

Interesting Observations

  • The top 10 stocks are equal to 52.8% and top 20 stocks is equal to 72.76%. The concentration of weightage towards the top 10 and 20 is reducing since a year now. 
  • The highest weight in Nifty - HDFC Bank has a weightage of 8.06%. Earlier the top weight stock would have close to 10% weightage or more. 
  • PSU Banks comprise only 3%

Nifty Index Exclusion/Inclusion - Rules

  • Index is re-balanced on semi-annual basis. The cut-off date is January 31 and July 31 of each year, i.e. For semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of change
  • When a better candidate is available in the replacement pool, which can replace the index stock i.e. the stock with the highest free float market capitalization in the replacement pool has at least twice the free float market capitalization of the index stock with the lowest free float market capitalization
  • 5 changes can be made in a year.

Possible Changes

Bottom 5 of Nifty and Free Floats

Name
Free Float

Bank of Baroda
14491.78

Tata Power Co. Ltd.
13753.85

ACC Ltd.
12497.71

Bharat Heavy Electricals Ltd.
10976.02

Idea Cellular Ltd.
9345.84

Top 5 of Nifty Next 50 and Free Floats


Name
Free Float

Indian Oil Corporation Ltd.
33146.65

Vedanta Ltd.
23710.29

UPL Ltd.
23614.25

Hindustan Petroleum Corporation Ltd.
21967.12

Indiabulls Housing Finance Ltd.
20095.75

Indian Oil Corporation has 3 times free float marketcap to the last 2 of Nifty stocks. ( BHEL and Idea )  

Vedanta has the required 2 times the free float market cap to the last 2 of Nifty stocks. ( Bhel and Idea) 

The cut-off point is 31st January and effective date 1st April 2017. 


It seems mostly Idea will be excluded and Indian Oil Corporation included.

its possible that Vedanta may replace Bhel in the index.   ( unless prices move way too much in next 20 days)

If this happens it would be interesting to note that Vedanta was excluded last year in April 2016. Price at that 65-75 is now at 230 ! 

Article by Nooresh Merani

Nooresh has written 2571 articles.

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