Nifty India Manufacturing

What is NIFTY India Manufacturing?

NIFTY India Manufacturing is a thematic index on the National Stock Exchange (NSE) which captures the performance of the domestic manufacturing sector on a real-time basis. It is currently constituted of 79 stocks that are selected based on float-adjusted market capitalisation from the combined universe of NIFTY 100, NIFTY Midcap 150, and NIFTY Smallcap 50 indexes. 

Some of the basic industries, based on AMFI classification, eligible for inclusion in the NIFTY Manufacturing index are 2/3 Wheelers, Abrasives, Aerospace & Defence, Air Conditioner, Aluminium, Copper & Zinc Products, Batteries, Bearings, Biotechnology, Cables, Commercial Vehicles, Compressors & Pumps, Electrodes, Explosives, Fertilisers, Footwear, Furniture, Industrial Equipments, Industrial Gases, Iron & Steel, Lubricants, Medical Equipment & Supplies, Petrochemicals, Pharmaceuticals, Precious Metals, Railway Wagons, Refractories, Ship Building, Tyres & Rubber Products etc.  

In light of the strategic importance of the Indian manufacturing sector, the Nifty India Manufacturing Index was launched on August 16, 2021, with the base date as April 1, 2005, and the base value at 1000 by NSE Indices Limited. The India Manufacturing index is governed by a three-tier structure comprising the BOD of NSE Indices, the Index Advisory Committee and the Index Maintenance Sub-Committee.

The NIFTY India Manufacturing share price since inception has breached the levels of 7,500 at ~15x P/E multiples. It is reconstituted semi-annually and caps individual stocks at 5% weightage. NIFTY India Manufacturing has a variant in the form of NIFTY India Manufacturing Total Returns Index. This index is suitable for benchmarking of fund portfolios and for launching index funds, ETFs, and other structured investment products.

How is NIFTY India Manufacturing Calculated? How Are Stocks Selected for Inclusion in NIFTY India Mfg?

The NIFTY India Manufacturing share price is computed by weighting its 79 stocks on the basis of periodically capped free-float market capitalisation 6 months data relative to a base market capitalisation value on a real-time basis. The NIFTY MFG index is represented by 8 sectors: Capital Goods (20.09%), Automobile and Auto Components (20.02%), Healthcare (19.19%), Metals & Mining (12.48%), Chemicals (11.44%), Oil, Gas & Consumable Fuels (8.53%), Consumer Durables (6.49%), and Textiles (1.76%).

In order to be considered for addition in the NIFTY India Manufacturing index, the securities must fulfil the following eligibility criteria:

1. Should be listed on the National Stock Exchange.
2. Should form a part of NIFTY 100, Nifty Midcap 150 and Nifty Smallcap 50’s combined universe.
3. The minimum number of stocks in the index is variable.
4. Should be a part of the manufacturing industry as determined by the AMFI classification.
5. Should provide ~75% coverage of float-adjusted market cap of eligible stocks within each eligible basic industry
6. Should adhere to the cap of 5% in case of a single stock based on free-float market capitalisation.
7. Should adhere to a minimum weight of 20% each for Automobile & Auto components and Capital Goods sectors, unless the number of stocks from these sectors falls below 4.
8. Should only consider ordinary equity shares.

The index value is calculated as follows – 

    Index Value = Current Index Market capitalisation/ (Base Free Float Market capitalisation * Base Index Value)

The NIFTY India Manufacturing index chart is rebalanced 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 Manufacturing (if any) is effective from the last trading day of March and September. This index will be screened on a quarterly basis for compliance with the SEBI norms on portfolio concentration for ETFs/Index Funds.