Nifty Metal

What is NIFTY Metal?

The NIFTY Metal is an index that tracks the performance of companies engaged in the metals sector and listed on the National Stock Exchange (NSE) of India. It includes 15 publicly traded companies engaged in various metal-related activities such as mining, refining, manufacturing, and distribution of metal products.

NIFTY Metal predominantly focuses on two sub-sectors: Metals & Mining, and Capital Goods, with allocations of around 94% and 6%, respectively. The index is governed and managed by NSE Indices Limited and provides investors with insights into the overall performance of the metal sector in the Indian stock market.

Investing in NIFTY Metal stocks allows investors to gain exposure to the metal industry, which can be influenced by factors such as commodity prices, global demand, economic conditions, and government policies related to the metal sector.

Selection Criteria for NIFTY Metal Stocks

The industries eligible for inclusion in NIFTY Metal span a wide spectrum, including aluminium, copper, zinc, iron & steel, precious metals, and others. The selection criteria for NIFTY Metal stocks are designed to ensure the inclusion of eligible companies that accurately represent the metal sector's performance. These criteria include:

Sector Classification: Companies must operate primarily in the metal sector, whether it be mining, refining, processing, manufacturing, or trading of metal products.

Listing on the NSE: Stocks must be listed and actively traded on the National Stock Exchange to qualify for inclusion in the NIFTY Metal index. They should already be a part of the NIFTY 500 index.

Market Capitalisation: Companies should meet specific market capitalisation requirements to ensure sufficient size and scale.

Trading Volume: Stocks must demonstrate adequate trading liquidity and volume to facilitate efficient market transactions. The criteria includes a trading frequency of 90% or more in the previous six months. While it is not mandatory, it is preferred if the stock is also traded in the F&O segment of the NSE.

Financial Viability: Companies should maintain sound financial health, profitability, and compliance with regulatory requirements.

These selection criteria help make the NIFTY Metal index a diversified portfolio of metal-related companies that accurately reflect the sector's performance and dynamics. The index is reviewed every six months to ensure relevance to the ever-evolving Indian mining industry. If the count of eligible stocks from a specific sector within NIFTY 500 drops below 10, the remaining stocks needed are chosen from the top 800 stocks based on both their average daily turnover and market capitalisation over the previous six months.

How is NIFTY Metal Index Calculated?

The NIFTY Metal index is calculated using a market capitalisation-weighted methodology, where the index value is determined based on the combined market capitalisation of its constituent stocks. The formula for calculating the index involves multiplying the individual stock weights by their respective market capitalisations and summing them up to arrive at the total index value.

NIFTY Metal Index =(Sum of Market Capitalisation of Constituent Stocks) / (Base Market Capitalisation) × (Base Index Value)

The base market capitalisation and base index value serve as reference points set at the index's inception and are periodically adjusted to account for corporate actions such as stock splits, mergers, or spin-offs. The NIFTY Metal provides investors with valuable insights into the metal sector's performance, enabling them to make informed investment decisions and manage their portfolios effectively.

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