Days Range
Company | LTP | Change | Day Range |
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Sector Name | Advances | No Change | Declined |
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FMCG or Fast Moving Consumer Goods refer to products that are used in daily consumption but have a low shelf life. These products get used up quickly and consumers frequently have to buy them. Some examples of FMCGs can be groceries, toiletries, etc. As the name suggests, these goods are fast moving i.e.; they sell quickly. FMCGs cost less, and comprise necessary items for daily use.
Since FMCG is a sector that is linked to consumers from all walks of life, be it rich or the poor, it is one of the most impactful sectors. Hence, it is important to study the performance and movement of this sector. To cater to this need, BSE launched the BSE FMCG index in April 2015. It studies the movement in the FMCG segment which is one of the 11 macro-economic indicators.
This index constitutes all stocks that belong to the FMCG sector and are a part of the BSE All Cap Index. As of now, the number of constituents on the list of S&P BSE FMCG is 81. These stocks are ranked based on the free-float market capitalisation method. But, to arrive at the final index value, the maximum weightage of the top stocks is capped.
The constituents of the S&P BSE FMCG Index are rebalanced every year in September. But, to accommodate any change in the constituents, a review of the index is conducted every quarter in December, March and June.
Due to the wide span of the FMCG sector, it is of paramount importance for investors and analysts to understand the impact of this sector on the overall stock markets. This can be easily done by studying the movements of the S&P BSE FMCG Share Price.
Firstly, for a stock to become a part of the BSE FMCG index, it must also be a part of the BSE All Cap index. This means that all the constituents should be related to the FMCG segment and fulfil the requirements of the BSE All Cap index. These include the requirements like Average turnover and traded values.
But, if the value of the index is derived using the free-float market capitalization method, there is a high probability that the top companies will constitute most of the index weightage. As a result, the diversification of index data will be reduced. To avoid this, the BSE FMCG index uses capped market cap method. Here are the capping rules:
Here’s an illustration of the redistribution method.
| Company Name | Weights in BSE FMCG Index |
| A | 35.00% |
| B | 20.00% |
| C | 17.50% |
| D | 16.50% |
| E | 11.00% |
| Total | 100.00% |
In the above table, the weightage of Company A exceeds 33%. Hence, 2% needs to be subtracted from Company A’s weights (35-33 = 2%) and added to the remaining constituents on a proportional basis. Here’s how the redistribution will work.
| Companies | Original Weight | Calculation | New Weight |
| A | 35.00% | (35 - 2)% | 33.00% |
| B | 20.00% | (20 + (2 ÷ 65 x 20))% | 20.62% |
| C | 17.50% | (17.50 + (2 ÷ 65 x 17.50))% | 18.04% |
| D | 16.50% | (16.50 + (2 ÷ 65 x 17.50))% | 17.01% |
| E | 11.00% | (11 + (2 ÷ 65 x 11))% | 11.34% |
| Total | 100.00% | 100.00% |
After concluding this step, the first condition is met. But, the new weights still do not comply with the second condition, i.e., the maximum weight of the top 3 constituents should be 63%. Hence, to calculate the S&P BSE FMCG share price, a series of rebalancings are required. The excess weights will be subtracted from the top 3 stocks and reduced from the remaining uncapped stocks until all the conditions are met.
