Nifty FMCG

What is NIFTY FMCG?

NIFTY FMCG is a sectoral index on the National Stock Exchange (NSE) which captures the performance of the fast-moving consumer goods (FMCG) sector in the Indian economy. It is constituted of 15 tradeable companies that are listed on NSE and deal with non-durable, mass-consumed products which are available off the shelf. 

The basic industries eligible to be included in the NIFTY FMCG index are the ones dealing with Animal Feed, Batteries, Breweries & Distilleries, Cigarettes & Tobacco Products, Dairy Products, Diversified FMCG, Edible Oil, Household Products, Other Agricultural Products, Other Beverages, Other Food Products, Packaged Foods, Personal Care, Photographic Products, Stationary, Sugar, and Tea & Coffee.

This NIFTY FMCG index was launched on September 22, 1999, with the base date as January 1, 1996, and the base value at 1000. The NIFTY FMCG share price since inception, has breached the levels of 40,000 at ~38 P/E multiples. It is reconstituted semi-annually in order to ensure that it continues to reflect the changing dynamics of the Indian consumer products industry.

The NIFTY FMCG index is owned and managed by NSE Indices Limited, previously known as India Index Services & Products Limited. The FMCG index is governed by a three-tier structure that comprises the BOD of NSE Indices, the Index Advisory Committee and the Index Maintenance Sub-Committee.

NIFTY FMCG has a variant in the form of the NIFTY FMCG Total Returns Index.

Nifty FMCG Stocks Selection Criteria

The NIFTY FMCG share price is computed by weighting its 15 stocks on the basis of periodically capped free-float market capitalization relative to a base market capitalization value on a real-time basis.

The securities have to fulfill the following eligibility criteria for inclusion:

1. Should be listed on the National Stock Exchange.
2. Should form a part of NIFTY 500.
3. If the number of eligible stocks falls below 20, then in such cases, the deficit number of stocks shall be selected from the universe of top 800 ranked stocks based on both average daily turnover and average daily full market capitalization data of the previous six months from NIFTY 500’s universe.
4. Should be a part of the FMCG sector.
5. Should have a trading frequency of at least 90% in the past six months.
6. Should have a listing history of at least six months.
7. Should preferably be traded on NSE’s F&O segment
8. A recently listed company (IPO) can be included if it meets the above eligibility criteria for a period of three months instead of six months.
9. Should adhere to the cap of 33% in case of a single stock and 62% for the top 3 stocks cumulatively at the time of rebalancing.

How is Nifty FMCG Value Calculated?

The index value is calculated as follows –

Index value = Current market capitalization/ (Base market capitalization * Base Index Value)

The NIFTY FMCG index is semi-annually based on six months of data, with the cutoff date being January 31 and July 31 of each year. The replacement of stocks in NIFTY FMCG (if any) is implemented from the last trading day of March and September after giving four weeks prior notice to the market.