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The National Stock Exchange today said it will use free float market capitalisation computation M-Cap method for all its sectoral indices with effect from October 11.
The exchange,in a circular,said its 9 sectoral indices,including Samp;P CNX 500 Index,FMCG Index,PSE Index and Pharma Index,will be calculated using free float M-Cap methodology.
Under the new methodology,the weight of any scrip on the index will be proportional to only the public shareholding in it,as against the present norm of including public as well as promoter holding.
The additional indices,which will now be using new method include,Samp;P CNX Industry Indices,CNX Energy Index,Service Sector Index,MNC Index and Infrastructure Index.
These indices are currently being computed using full market capitalisation weighted methodology.
The bourse is already using the method for its 12 indices that includes its benchmark Nifty index.
8220;After the change in methodology for the above-mentioned indices,all standard indices created and maintained by IISL India Index Services amp; Products Ltd would be computed using free float market capitalisation methodology,8221; the NSE said.
IISL is a joint venture between the NSE and Crisil that has been formed with the objective of providing a variety of indices and index related services for the capital markets.
Free float M-Cap is defined as that proportion of total shares issued by the company,which are readily available for trading in the market,excluding promoter,government and strategic holdings and other locked-in shares,which would not come to the market for trading in the normal course.
Under the 8216;full-market capitalisation8217; methodology,the total market capitalisation of a company,irrespective of who is holding the shares,is taken into consideration for computation of an index.
