Nifty Metal

What is NIFTY Metal?

NIFTY Metal is a sectoral index on the National Stock Exchange (NSE) that captures the performance of the metals sector in the Indian economy. It is constituted of 15 tradeable companies that are listed on NSE, and are engaged majorly in 2 sub-sectors: Metals & Mining (94.11%) and Capital Goods (5.89%). 

The basic industries eligible to be included in the NIFTY Metal index are the ones dealing with Aluminium, Copper, Zinc, Ferro & Silica Manganese, Industrial Minerals, Iron & Steel, Iron & Steel Products, Pig Iron, Precious Metals, Sponge Iron, Trading – Metals, Trading – Minerals, and Other Diversified Metals.

This NIFTY Metal index was launched on July 12, 2011, with the base date as January 1, 2004, and the base value at 1000. The NIFTY Metal share price since inception, has breached the levels of 4,800 at ~4 P/E multiples. It is reconstituted semi-annually in order to ensure that it continues to reflect the changing dynamics of the Indian mining industry.

The NIFTY Metal index is owned and managed by NSE Indices Limited, previously known as India Index Services & Products Limited. The Metal 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 Metal has a variant in the form of the NIFTY Metal Total Returns Index. This index has practical applications for launching ETFs, index funds, structured investment products, and benchmarking fund portfolios.

Nifty Metal Stocks Selection Criteria

The NIFTY Metal 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.

A security must meet the following eligibility criteria to be included:

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 10, 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 Metals 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 Metal Calculated?

The index value is calculated as follows –

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

The NIFTY Metal 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 Metal (if any) is implemented from the last trading day of March and September after giving four weeks prior notice to the market.