Nifty Infra

What is Nifty Infrastructure?

The Nifty Infrastructure index, also known as Nifty Infra, is a sectoral index that was launched by NSE Indices Limited, a subsidiary of the National Stock Exchange (NSE), on August 7, 2007. The index is designed to measure the performance of companies operating in the infrastructure sector of the Indian economy.

The Nifty Infrastructure index serves as a benchmark to measure the performance of investments in the infrastructure sector. It is widely followed by various market participants, including institutional investors, fund managers, and individual investors, for this reason.

Nifty Infra stocks include 30 companies from industries such as construction, power, port, railways, telecom, air, roads, shipping, and other utility services listed on the NSE. The companies included in the index are selected based on certain specific eligibility criteria.

The Nifty Infra stock list is reviewed and rebalanced periodically on a semi-annual basis on January 31 and July 31 of each calendar year. Such periodic reviews are done to ensure that the index continues to accurately reflect the performance of the Indian infrastructure sector. The top 10 constituents of the index, along with their respective weights, are tabulated below.

How is the Nifty Infrastructure Index Calculated?

The Nifty Infrastructure index is a free-float market capitalisation-weighted index. Here is how the index value is calculated:

Step 1: Computation of free-float market capitalisation of Nifty Infra stocks

The first step is to calculate the market cap of each company on the Nifty Infra stock list and adjust it for free float. The mathematical formula used to calculate this is as follows:

Free-Float Market Cap of a Stock = [(Current Market Price x Total Number of Outstanding Shares) x Free-Float Factor]

Step 2: Computation of the Nifty Infra index value

The next step is to arrive at the Nifty Infra index value by adding the free-float market cap of all the index’s constituents and multiplying it with the index’s base value. The resulting figure is then divided by the index’s base market capitalisation. Here is the following mathematical formula that is used to calculate the index value:

Nifty Infra = [(Free-Float Market Cap of All Constituents * Base Index Value) ÷ Base Market Cap]

Here, the base index value is 1,000, and the base market cap is the market capitalisation of all of the index’s stocks as of the base date of January 1, 2004.

Inclusion Criteria for the Nifty Infrastructure Index

A company must satisfy the below-mentioned criteria to be eligible for inclusion in the Nifty Infra index.

The company must be a part of the infrastructure sector.

The company must be a part of the Nifty 500 index. If the number of companies eligible for inclusion in the Nifty Infra index is below 10, the deficit shall be bridged by selecting companies from the top 800 in terms of average daily market capitalisation and average daily turnover for the last six months.

The company must be a part of the derivatives (F&O) trading segment.

The trading frequency of the company must be at least 90% in the last six months.

The final list of Nifty Infra stocks is made on the basis of the free-float market capitalisation method.

The weightage of any single stock in the Nifty Infra stock list must not be more than 20% at the time of rebalancing.

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