Nifty Pharma is a sectoral index that tracks the performance of the top pharmaceutical companies listed on the National Stock Exchange (NSE). A total of 20 stocks make up the Nifty Pharma index, acting as a benchmark for the Indian pharmaceutical sector.

The Nifty Pharma index was introduced in July 2005, with January 1, 2001, as the base date and a base value of 1,000. The index is rebalanced at an interval of six months, with January 31 and July 31 being the semi-annual cut-off dates. The free-float market capitalisation method is used to calculate the index.

The company should be listed on the National Stock Exchange and included in the Nifty 500 index at the time of index review. The company should be operating in the pharmaceutical sector.

The company should have recorded a minimum trading frequency of 90% in the previous six months and have been listed on the NSE for at least one month. Companies also traded in the derivatives segment are given preference.

In the rare event that the Nifty 500 index has less than 20 eligible stocks, more pharma companies will be selected from the top 800 companies based on average daily turnover and average daily full market capitalisation.

The value of the Nifty Pharma index is calculated using the free-float market capitalisation method. The formula is: Index value = Current market capitalisation ÷ (Base market capitalisation x Base index value), where the base index value is 1,000.

The weightage of each company is determined based on its free-float market capitalisation. However, no stock should have a weightage exceeding 33% and the top three companies in the index should not have a weightage exceeding 62% cumulatively.