Key index changes effective from 28th April 2023

The index Committee of the NSE regularly changes the composition of the index based on various parameters. One of the most common reasons for the change in indices is when companies have to be removed from an index on account of the demerger announced by a company. The demerger leads to a part or division of the company being hived off into a separate company (listed or unlisted). In such cases, as part of the scheme of arrangement, the companies have to issue shares in the demerged entity to the existing shareholders of the parent to compensate for the exit of the business. These changes to the index will be effective from the close of 27th of April 2023, i.e., effective from trading on 28th April 2023, which marks the start of the new F&O settlement contract.

Companies to be removed from indices due to demerger

As per the Index Maintenance Sub-Committee (Equity) of NSE Indices Limited, the following stocks would be replaced from various indices due to specific reasons assigned here under. As stated earlier, all these changes would be effective from April 28th, 2023 (i.e., the close of April 27th, 2023). All these changes are on account of scheme of demerger.

1. Bajaj Electricals Ltd (BAJAJELEC) will be removed from the various indices due to the scheme of arrangement for demerger of its power and the power distribution Business into Bajel Projects Ltd. The same has already been approved by the equity shareholders of the company. The exactly swap ratio and other terms of the demerger arrangement are yet to be finalized and announced.
    

2. Edelweiss Financial Services Ltd (EDELWEISS) will also be removed from the various indices under the scheme of arrangement announced for the demerger of its wealth management business. The wealth management business would be demerged into a separate entity called Nuvama Wealth Management Limited. This business was formerly a part of Edelweiss Securities Limited. The same has been approved by the equity shareholders of the company. The exactly swap ratio and other terms of the demerger arrangement are yet to be finalized and announced.
    

3. Vakrangee Ltd (VAKRANGEE) will also move out of the various indices under the scheme of arrangement for demerger of its E-Governance & IT/ITES business. These will be demerged into a separate entity called VL E-Governance & IT Solutions Ltd. The same has already been approved by the equity shareholders of the company. The exactly swap ratio and other terms of the demerger arrangement are yet to be finalized and announced.

In addition to the above case of demerger, there are 3 more companies that would be removed from various indices as they would be withdrawn by the NSE from the Permitted to trade category. These 3 stocks include Best Agro Life Ltd (BESTAGRO), Hindustan Foods Ltd (HNDFDS) and SpiceJet Ltd (SPICEJET).

Let us now turn to how the effect for the same will be implemented in the various relevant indices of NSE.

How the various NSE indices will be modified to reflect these changes

Here is a complete list of indices where appropriate changes would be made to reflect the removals from the various indices and the inclusion of new stocks in the index.

• Let us start with the broad based Nifty 500. The Nifty 500 index will see the exclusion of Bajaj Electricals Ltd and Edelweiss Financial Services Ltd. In their place 2 new stocks would be added to the index. The two stocks added in place are Eris Lifesciences Ltd and NMDC Steel Ltd.
   

• Let us now turn to the Nifty Small Cap 250 index. The Nifty Small Cap 250 index will see the exclusion of Bajaj Electricals Ltd and Edelweiss Financial Services Ltd from the index. In their place 2 new stocks would be added to the index. The two stocks added in place would once again be Eris Lifesciences Ltd and NMDC Steel Ltd.
   

• Let us now turn to the Nifty Small Cap 50 index. The Nifty Small Cap 50 index will see the exclusion of Bajaj Electricals Ltd from the index. In its place 1 new stock would be added to the index. The stock added in place would be RBL Bank Ltd.
   

• Let us now turn to the Nifty Small Cap 100 index. The Nifty Small Cap 100 index will see the exclusion of Bajaj Electricals Ltd from the index. In its place 1 new stock would be added to the index. The new stock added in place would be the defence company, Cochin Shipyards Ltd, which has been a recipient of large defence orders of late.
   

• Let us now turn to the Nifty Mid Small Cap 400 index. The Nifty Mid Small Cap 400 index will see the exclusion of Bajaj Electricals Ltd and Edelweiss Financial Services Ltd from the index. In their place 2 new stocks would be added to the index. The two stocks added in place would once again be Eris Lifesciences Ltd and NMDC Steel Ltd.
   

• Let us move to the Nifty Micro Cap 250 index. The Nifty Micro Cap 250 index will see the exclusion of 5 stocks from the index viz., Best Agro Life, Eris Lifesciences, Hindustan Foods Ltd, SpiceJet Ltd and Vakrangee Ltd from the index. In their place 5 new stocks would be added to the index. The 5 stocks added in place would be Aarti Pharmalabs Ltd, Ahluwalia Contracts Ltd, Choice International Ltd, Johnson Controls (Hitachi Air Conditioning Ltd) and Titagarh Wagons Ltd.
   

• Let us now turn to the Nifty Total Market index. The Nifty Total Market index will see the exclusion of 6 stocks viz, Bajaj Electricals, Best Agro Life, Edelweiss Financial Services, Hindustan Foods, SpiceJet Ltd and Vakrangee Ltd from the index. In their place 6 new stocks would be added to the index. The 6 stocks added in place would include Aarti Pharmalabs Ltd, Ahluwalia Contracts Ltd, Choice International Ltd, Johnson Controls (Hitachi Air Conditioning Ltd), NMDC Steel and Titagarh Wagons Ltd.

Apart from all these changes, the Nifty Sharia Index (in sync with the Islamic Sharia code) will see the exclusion of Bajaj Electricals Ltd from the index. However, no fresh inclusion would be made in the Nifty Shariah indices.