Nifty MNC

What is NIFTY MNC?

NIFTY MNC is a thematic index on the National Stock Exchange (NSE) which captures the performance of foreign-owned companies in India on a real-time basis. It initially had only 15 constituents. However, since September 28, 2018, it is constituted of 30 stocks that span 11 sectors: FMCG (40.32%), Capital Goods (16.40%), Automobile & Auto Components (12.57%), Healthcare (8.30%), Construction Materials (5.17%), IT (5.08%), Metals & Mining (4.82%), Consumer Durables (3.88%), Telecommunication (1.31%), Diversified (1.19%), and Oil, Gas & Consumable Fuels (0.97%).

This NIFTY MNC index was launched with the base date of January 2, 1995, and the base value at 1000. The NIFTY MNC share price since inception has breached the levels of 19,000. It is reconstituted semi-annually and caps individual stocks at 10% weightage. 

The NIFTY MNC index is owned and managed by NSE Indices Limited, previously known as India Index Services & Products Limited. The MNC index is governed by a three-tier structure comprising:

• BOD of NSE Indices: responsible for managing the index as per a detailed framework.
• Index Advisory Committee (Equity): responsible for providing guidance on macro issues related to the index.
• Index Maintenance Sub-Committee: responsible for the maintenance of the index’s methodology and stock selection criteria.

NIFTY MNC has a variant in the form of NIFTY MNC Total Returns Index. This index is ideal for benchmarking of fund portfolios by AMCs. It can also be used for launching index funds, ETFs and various other structured investment products.

Nifty MNC Stocks Selection Criteria

The NIFTY MNC share price is computed by weighting its 30 stocks on the basis of periodically capped free-float market capitalization relative to a base market capitalization value on a real-time basis. 

In order to be considered for inclusion in the NIFTY MNC 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 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 belong to the category of companies owned >50% by foreign promoters.
5. New securities will be included, if their float-adjusted market capitalization is at least 1.5 times of the index’s smallest constituent’s free-float market capitalization.
6. 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.
7. Should adhere to the cap of 10% in case of a single stock at the time of rebalancing, but weightage of stocks may increase beyond 10% between two rebalancing periods.

How is Nifty MNC Value Calculated?

The index value is calculated as follows – 

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

Where,

Current Index Market Capitalization = Shares o/s * IWF * Capping factor * Price 

IWF (Investable Weight Factors) = 1 as it is based on market capitalization method 

Capping Factor = calculated every time an index is rebalanced

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