NIFTY PHARMA

This particular sector is considered as one of the key sectors where Indian companies have created a global brand for themselves besides the software. Several Indian companies have also taken advantage of the opportunities in the regulated generics market in the western countries and even made deep inroads, especially in offering low-cost equivalents of expensive drugs. Also, pharma outsourcing into India and low-cost Healthcare services are being expected to be the key areas of growth shortly. Besides, the inherent potential of biotechnology has also attracted various new companies, and it is also a key growth area for Indian companies. NSE Indices has also developed the Nifty Pharma Index for capturing the performance of the companies in this specific sector. Also, the index comprises about 10 companies listed on the National Stock Exchange of India (or NSE). Also, NIFTY Pharma Index is being computed using the free-float market capitalization method, in which the level of the index completely reflects the total free-float market value of entire stocks in the index relative to a specific base market capitalization value. It can also be used for several purposes, such as the launching of index funds, benchmarking fund portfolios, and ETFs and structured products. The Eligibility Criteria for the Selection of Constituent Stocks:

• The companies must rank within the top 800 based on both average daily turnover as well as average regular full market capitalization for the last 6 months.
• The companies should also form a part of the pharmaceutical sector.
• Its trading frequency should be at least 90% in the previous 6 months.
• It should also have a listing history of 6 months, as a company that comes out with an IPO would be eligible for the inclusion in the index, only if it accomplishes the normal eligibility criteria for the index of 3 months instead of 6 months.
• Also, the final selection of 10 companies shall be made based on the free-float market capitalization.
• The weightage of every stock in the index is to be calculated based on its free-float market capitalization in such a way that no single stock should be more than 34%, and the weightage of the top 3 stocks should not be more than 63% during rebalancing.

Index Re-Balancing: It is done based on a semi-annual basis, and the cut-off date is January 31 as well as July 31 of each year, i.e., and for a semi-annual review of indices, average data for 6 months ending the cut-off date is considered. Also, 4 weeks before the notice is given to the market from the date of the change. Index Governance: Also, a professional team manages all NSE indices, and there is a three-tier governance structure, which comprises the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.