The price-to-book value (P/B) for indices on the National Stock Exchange (NSE) will be calculated based on the networth of each index constituent at the consolidated level in the annual financials, according to NSE Indices, a subsidiary of the exchange. Currently, the P/B for indices is calculated by taking into consideration the networth reported by index constituents in their standalone financial statements. The changes in the criteria will take effect from September 29, NSE Indices said.

In addition, NSE Indices has also revised the eligibility criteria for inclusion of stocks in several sectoral/market cap indices. Currently, when the number of eligible stocks representing a particular sector within Nifty500 falls below 10, the deficit number of stocks are selected within the top 800 based on both average daily turnover and average daily full market capitalisation in the preceding six months period. Under the revised criteria, if the number of eligible stocks is still less than 10, then the deficit number will be selected within the top 1000, top 1100, top 1200, and so on, until at least 10 eligible stocks are obtained. If the number of eligible stocks is still less than 10, then the index may have less than 10 constituents, according to NSE Indices. These revised criteria will be applicable for the sectoral indices of NSE and will come into effect from September 29.

The revised criteria were announced by NSE Indices along with the semi-annual index changes. In the latest changes, ACC, FSN E-Commerce, HDFC Asset Management Co, Indus Towers, and Page Industries have been excluded from the Nifty Next 50 index. They have been replaced by Punjab National Bank, Shriram Finance, Trent, TVS Motor Co, and Zydus Lifesciences.

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