Nifty Commodities Index

What are Nifty Commodities?

Nifty Commodities is a thematic index launched on September 07, 2011, by the National Stock Exchange (NSE). The index represents a curated list of 30 companies from the commodities segment, including sectors like metals, mining, energy, chemicals, oil and gas, cement, and sugar, among others.

The Nifty Commodities index was constituted to enable investors, traders, and market analysts to effectively track the performance of these commodity-focused companies. It is also widely used by asset management companies to benchmark the performance of their mutual funds and exchange-traded funds (ETFs).

The various companies in the Nifty Commodities stock list are typically from the large-cap and mid-cap segments with significant market influence in their respective industries. As of November 29, 2024, the index’s sectoral distribution was as follows:

• - Oil, gas, and consumable fuels: 27.74%
• - Metals and mining: 24.46%
• - Power: 22.71%
• - Construction materials: 16.23%
• - Chemicals: 7.42%
• - Capital goods: 1.45%

As with most other Indian market indices, the Nifty Commodities index is also calculated using the free-float market capitalisation method. According to this method, each stock is assigned a weight based on market capitalisation. To ensure that Nifty Commodities accurately reflect the overall health of the Indian commodities segment, the index is reviewed and rebalanced semi-annually on the following cut-off dates: January 31 and July 31.

What criteria are used to select Nifty Commodities stocks?

The selection of stocks for the Nifty Commodities index is governed by strict criteria. The goal is to ensure that the index features a balanced and diversified portfolio that accurately reflects the performance of the commodities sector. Here is a quick overview of the criteria that entities must meet to be eligible for inclusion in the Nifty Commodities stock list.

The company must be a part of the Nifty 500 index at the time of review. The Nifty 500 is a broad-market index that includes the top 500 companies based on market capitalisation listed on the National Stock Exchange.

The company’s business must be focused on the commodities sector.

The company’s trading frequency must be at least 90% in the last six months. This criterion ensures that the entity has enough liquidity to be bought and sold seamlessly.

At the time of review, the company must have been listed on the exchange for at least a minimum of 1 month.

The final inclusion of the eligible companies into the Nifty Commodities stock list is done based on free-float market capitalisation. Usually, companies with higher free-float market capitalisation are preferred to ensure the index is tradable and reflective of the market dynamics.

How is the value of Nifty Commodities determined?

The value of Nifty Commodities is determined using the free-float market capitalisation methodology, similar to other market indices. The method considers only those shares which are freely available for trading and excludes promoter holdings, employee stock options, and restricted shares.

The mathematical formula used to calculate the value of the Nifty Commodities index is as follows:

Here, the base index value is set at 1,000 and the base free-float market capitalisation represents the market capitalisation of all of the index’s constituents on the base date of January 01, 2004.

To calculate the Free-Float Market Capitalisation of a stock, the following formula is used:

Here, the capping factor for the Nifty Commodities index is 10% or 0.1. Once the calculation is done for each of the index’s constituents, the values are summed up to arrive at the free-float market capitalisation of the index.

The Nifty Commodities stock list is reviewed semi-annually and adjustments are made to ensure the index remains aligned with the market movements.

Nifty Commodities FAQ's