The Nifty Shariah indices are designed to offer investors Shariah-compliant investment solutions. NSE Indices Limited calculates three shariah indices Nifty50 Shariah, Nifty500 Shariah & Nifty Shariah 25.
The Nifty 50 Index is parent index to Nifty50 Shariah Index. This index does not have fixed number of companies. Constituents of parent index which are Shariah compliant are part of Nifty50 Shariah Index.
Nifty50 Shariah Index can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs and structured products.
Nifty50 Shariah Methodolgy
i. The current constituents of the Nifty 50 index are screened for Shariah compliance, those that are compliant form the Nifty50 Shariah.
ii. The company should have a listing history of 6 months. A company which comes out with an IPO will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.
iii. Stocks that meet above mentioned criteria and are also Shariah compliant form part of Nifty50 Shariah Index.
iv. Weightage of each stock in the index is calculated based on its free-float market capitalization such that no single stock shall be more than 33% and weightage of top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing.
Monthly shariah compliance screening is carried out by shariah screening partner of NSE Indices Limited. Index changes are typically implemented from the first working day after F&O expiry of respective month.
A professional team manages all NSE indices. There is a three-tier governance structure comprising the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.