Nifty Metal

What is Nifty Metal?

The Nifty Metal Index is a sectoral index on the National Stock Exchange (NSE) that captures the performance of the metals sector in the Indian economy. It consists of 15 tradeable companies listed on NSE, primarily involved in two sub-sectors: Metals & Mining (94.11%) and Capital Goods (5.89%). The index provides a comprehensive view of the metal industry's health and its contribution to the broader market.

Launched on July 12, 2011, with a base date of January 1, 2004, and a base value of 1000, the Nifty Metal Index has become a critical benchmark for the Indian metals sector. Since its inception, the index has witnessed significant growth, reflecting the dynamic changes within the industry. The Nifty Metal Index is owned and managed by NSE Indices Limited, formerly known as India Index Services & Products Limited (IISL). It is governed by a three-tier structure, comprising the Board of Directors of NSE Indices, the Index Advisory Committee, and the Index Maintenance Sub-Committee.

Nifty Metal Stocks Selection Criteria

The selection of companies in the Nifty Metal Index is based on stringent criteria to ensure only the most relevant and liquid stocks are included. The eligibility criteria are as follows:

1. Listing on NSE: The company must be listed on the National Stock Exchange.

2. Inclusion in Nifty 500: The company must be part of the Nifty 500 Index.

3. Sector Classification: The company must be involved in the metals sector, dealing with commodities such as Aluminium, Copper, Zinc, Iron & Steel, Precious Metals, and others.

4. Trading Frequency: The stock must have a trading frequency of at least 90% in the past six months.

5. Listing History: The stock must have a listing history of at least six months. However, a recently listed company (IPO) can be included if it meets the above criteria for a period of three months.

6. Free-Float Market Capitalization: The index caps single stock exposure at 33% and the cumulative exposure of the top three stocks at 62% at the time of rebalancing.

How is the Nifty Metal Index Calculated?

The Nifty Metal Index is calculated using the free-float market capitalization method. This method considers only the shares available for trading in the open market, providing a more accurate reflection of market movements. Here’s a brief overview of the calculation process:

Index Value Calculation:

- Current Market Capitalization: Sum of the free-float market capitalization of all constituent stocks.

- Base Market Capitalization: Market capitalization of the index at the base date.

- Base Index Value: Typically set at 1000 at the base date.

The index is reviewed semi-annually, based on data from the past six months, with the cutoff dates being January 31 and July 31 each year. Any changes in the index composition are implemented from the last trading day of March and September, after providing four weeks' prior notice to the market.