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NIFTY Energy is a sectoral index on the National Stock Exchange (NSE) that represents the performance of companies engaged in the energy sector in India. The index includes a selection of companies primarily involved in activities related to energy production, distribution, and services across sub-sectors such as coal production, oil and gas, drilling and refineries, power generation, renewable energy, and related services.
The NIFTY Energy index is a crucial tool for investors interested in the energy sector. It not only serves as a benchmark but also provides a foundation for various investment products such as mutual funds, ETFs, and other financial instruments.
Companies must be listed on the NSE and already be a part of the NIFTY 500 index, classified under the energy sector (including oil and gas, power generation, and renewable energy sub-sectors).
Companies must meet specific market capitalisation requirements, with the free-float market capitalisation being the key factor. They must also have high liquidity, with a trading frequency of at least 90% in the previous six months.
The selection process is periodically reviewed twice each year. Companies that no longer meet the criteria may be removed, and new companies that meet the requirements may be added.
The value of the NIFTY Energy index is calculated using a free-float market capitalisation-weighted method. The formula is: NIFTY Energy Index = (Sum of Market Capitalisation of Constituent Stocks) / (Base Market Capitalisation) × (Base Index Value).
Each company's weight in the index is based on its free-float market capitalisation relative to the total free-float market capitalisation of all companies in the index. The index value is calculated by summing the free-float market capitalisations of all the companies and dividing by a divisor that is adjusted for continuity.
The index has a base date and base value, which serve as a reference point. The NIFTY Energy index is periodically reviewed and adjusted to reflect changes in constituent companies' market capitalisations.
