Nifty India Consumption Index - An Introduction

The Nifty India consumption index is the thematic index of the National Stock Exchange (NSE) launched on 12th July 2011. This index comprises 30 NSE-listed stocks that represent the domestic consumption sector. 

The Nifty India Consumption Index portrays a comprehensive real-time image of the performance of India’s consumption sector. These sectors include Fast Moving Consumer Goods (FMCG), Automobile and Auto Components, Consumer Services, Telecommunication, Consumer Durables, Healthcare, Power, Services, and Realty.

The index is managed and owned by the NSE Indices Limited (previously known as the India Index Service and Products Limited). It is a wholly-owned subsidiary of the NSE and is responsible for structuring and rebalancing the Nifty India Consumption Index. 

• The Nifty India Consumption Index tracks the behaviour and performance of the companies that represent the domestic consumer sector. 
• The Nifty India Consumption Index was launched on 12th July 2011 and comprises 30 NSE-listed stocks. 

• The index is owned and operated by the NSE Indices Limited, a wholly owned subsidiary of the National Stock Exchange (NSE).

Nifty India Consumption Index Stocks - Selection Criteria

1. The companies must be domiciled in India. 
2. The companies must be included in the consumption sector. 
3. The trading frequency of the company must be at least 90% in the last six months and have a listing history of 1 month as of the cutoff date. 
4. Companies should form part of the Nifty 500 at the time of review. In this case, if the number of eligible stocks representing a particular sector within the Nifty 500 falls below 10, then the deficit number of stocks shall be selected from the universe of stocks ranked within the top 800 based on both average daily turnover and average daily full market capitalisation based on previous six months period data used for index rebalancing of Nifty 500.
5. More than 50% of the company's revenue should be generated from domestic markets. 

The Nifty India Consumption Index stocks are also subjected to a semi-annual review, the cutoff dates of which are 31st January and 31st July. To review the index on the mentioned cutoff dates, the average data for the past six months is taken into account. 

Nifty India Consumption Index - Calculation and Formula 

The Nifty India Consumption Index is calculated based on the free-float market capitalisation method, where the index value represents the aggregate free-float market cap of its constituents. Also, the weight of each Nifty India Consumption Index stock is capped at 10%. It means that no stock can have a weightage of more than 10% of the index value. The index can be calculated as per the formula below:

Nifty Consumption Index Formula = Current index market capitalisation  / (Base market cap * Base index value)

Here,

Current free-float market cap = Shares outstanding * IWF * Capping Factor * Price 

Free float = The Amount of outstanding shares available for secondary trading

Investible Weight Factor (IWF) = 1 (because it is based on the market capitalisation)

Key Takeaways on Nifty India Consumption Index

• The Nifty India Consumption Index is a thematic index that tracks the behaviour and performance of India's domestic consumer sector. 
• It includes 30 NSE-listed stocks from sectors like consumer non-durables, healthcare, telecom, media & entertainment, and many more. 
• The index primarily focuses on providing a snapshot of the investor's sentiment towards the domestic consumer sector of the stock market. 
• The index is calculated using the free-float market capitalisation method and carries a capping of 10% on the constituents' weights.