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New Age Tech Companies now will be the part of Nifty Next 50

28 Feb 2022 0 COMMENT

The New Age Tech companies which had debuted in the stock market with much fanfare recently are set to be included in the Nifty Next 50 Index. Among these are stocks of  Zomato and Nykaa which listed at a premium, leading to scores of happy investors, whereas Paytm listed at a discount of about 30%.

The Nifty Next 50 is a benchmark of the Indian stock market that puts up the performance made by the next 50 stocks that subsequently come after the Largest, top 50 Companies listed on NSE as Nifty50.The changes and new modifications criteria announced by the Stock Exchanges has paved the path for these companies listed about 8 months ago to enter in the Index from March 31, 2022.

Free Float Market Capitalization Weighted Index- Nifty and Sensex are designed on the basis of this calculation. In promising businesses the Equity holding is divided among different stake holders like- promoters, institutions, corporate, individuals etc. Some shares are readily available for trading which are termed as free float shares. Now the Index is based on the calculation of the  weights of each security based on market capitalization. The weightage of the stocks is decided on the basis of Market Capitalization on the Free Float basis.

MARKET CAPITALIZATION (MCAP)= Number of Shares X Market Price

Nifty Next 50 companies constitute the 51st to 100th largest companies by Free Float Market Capitalization  of NSE. As per the SEBI rules and regulations top 100 companies by Market Capitalization are termed as Large Cap companies. The Nifty Next 50 is calculated on real time basis (daily) and rebalanced semi-annually in March and September based on data of 6 months ending January and July respectively. Nifty Next 50 makes 13% of total Market capitalization of NSE.

SECTOR

WEIGHT (%)

FINANCIAL SERVICES

20.22%

CONSUMER GOODS

16.26%

METALS

12.07%

CONSUMER SERVICES

8.95%

POWER

8.01%

PHARMA

7.39%

OIL AND GAS

4.74%

HEALTHCARE SERVICES

4.10%

CEMENT AND CEMENT PRODUCTS

3.45%

CHEMICALS

3.11%

IT

2.26%

CONSTRUCTION

1.84%

INDUSTRIAL MANUFACTURING

1.77%

FERTILISERS AND PESTICIDES

1.68%

SERVICES

1.53%

TELECOM

1.47%

AUTOMOBILE

1.14%

Source- NATIONAL STOCK EXCHANGE(NSE) as on 28th February,2022

Nykaa has help double Investors capital on its day of listing on the Stock market, while Zomato made a listing at around 53% premium . However, since the Market started its correction due to Geo-political tension between Ukraine and Russia, the shares of these companies has not done too well. Among other reasons are Oil price hike which touched $100 for a barrel, Commodity prices showing significant upsurge and FIIs selling making it more distressful for the market to hold on to its gains.

Due to this Zomato’s share has dipped 42% this year now trading nearly around Rs 81 whereas Nykaa has witnessed its  price to reach below 1330,around 36% decline. Paytm is faring worse than the other two New age companies which is significantly below its issue price from 2150 to around 800.

The Index Maintenance Sub- Committee - equity (IMSC) of the NSE Limited has decided to make some significant changes in the eligibility criteria  in its periodic review of the Stocks of the Next 50 Index. The committee has decided that the constituents should have a minimum listing history of 1 calendar month as on the Cutoff date compared to 3 months in the earlier Criteria of the Index.

This changing conditions on 25th February 2022 has paved path for all three new age companies to be included in the Nifty Next 50.

The Table below shows the stocks of Nifty Next 50 where some are excluded and some are included among which NYKAA, PAYTM, ZOMATO of the new age companies made it to Nifty Next 50 from 31st March 2022-

NIFTY NEXT 50

STOCKS EXCLUDED

STOCKS INCLUDED

AUROBINDO PHARMA

NYKAA

HINDUSTAN PETROLEUM CORPORATION

MINDTREE

INDRAPRASTHA GAS

PAYTM

JINDAL SHAW & POWER

SRF

APOLLO HOSPITAL

INDIAN OIL CORPORATION

YES BANK

ZOMATO

Source- NATIONAL STOCK EXCHANGE(NSE) as on 24 February 2022

In Nifty 50 Index APOLLO HOSPITAL WILL REPLACE INDIAN OIL CORPORATION

BANK NIFTY

EXCLUDED

INCLUDED

RBL BANK

BANK OF BARODA

Source- NATIONAL STOCK EXCHANGE(NSE) as on 24 February 2022

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