NSE Indices changes criteria to calculate price-to-book value for indices

The price-to-book value (P/B) for indices on the National Stock Exchange will be calculated based on the networth of each index constituent at the consolidated level in the annual financials, NSE Indices, a subsidiary of the exchange, said in a release on Thursday.

Currently, the P/B for indices are calculated by taking into consideration the networth reported by index constituents in the standalone financial statements.

The changes in the criteria will take effect from September 29, NSE Indices said.

NSE Indices has also revised the eligibility criteria for inclusion of stocks in several sectoral/market cap indices.

Currently, when the number of eligible stocks, representing a particular sector within Nifty500, falls below 10, then the deficit number of stocks are selected within the top 800 based on both, average daily turnover and average daily full market capitalisation in the preceding six months period.

Now, if the number of eligible stocks is still less than 10, then the deficit number will be selected within the top 1000, top 1100, top 1200 and so on, NSE Indices said.

However, this will be based on both average daily turnover and average daily full market capitalization for the preceding six months period, until at least 10 eligible stocks are obtained.

If the number of eligible stocks is still less than 10, then the index may have less than 10 constituents, NSE Indices said.

This revised criteria will be applicable for the sectoral indices of NSE, and will come into effect from September 29.

The revised criterions were announced by NSE Indices along with the semi-annual index changes.

ACC, FSN E-Commerce, HDFC Asset Management Co, Indus Towers, and Page Industries have been excluded from Nifty Next 50 index. These have been replaced by Punjab National Bank, Shriram Finance, Trent, TVS Motor Co, and Zydus Lifesciences.

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