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FAQs
High quality information How is the S&P CNX Nifty closing price calculated? The Nifty closing prices are calculated by taking the last half an hour weighted average closing prices of the constituents of the index. Top What is special about the NSE closing price? NSE has the best surveillance procedures in India, so the extent of market manipulation is minimum there. In NSE, the professional staff of the surveillance department has no positions on the market. This elimination of conflicts of interest generates a more honest focus upon eliminating market manipulation. On a day to day basis millions of shares get traded on the NSE generating huge order flows. Due to the liquidity and order flow from numerous market players manipulation of the closing price becomes very hard. NSE is the most liquid exchange in India. Hence, the prices observed there are the most reliable. NSE has the highest trading intensity (reducing stale prices) and their bid-ask spreads are the tightest (reducing bid-ask bounce). This is assisted by the fact that the NSE tick size is Rs.0.05 for all stocks, which encourages tight bid-ask spreads. Top What about dividends? What is commonly reported as S&P CNX Nifty on TV and in the newspapers is actually the S&P CNX Nifty Price Index. It only reflects changes in prices. IISL also calculates something called the S&P CNX Nifty Total Returns (TR) index. This shows the returns on the index portfolio, inclusive of dividends. This is the appropriate benchmark for mutual funds, which do earn dividends. Both S&P CNX Nifty and S&P CNX Nifty TR use a base of 3 November 1995 as 1000. On December 31, 2001, i.e. nearly six years later, S&P CNX Nifty was at 1059.05 while S&P CNX Nifty TR was at 1150.28. The difference in the two levels is the return obtained on reinvestment of dividends through the intervening period. Top You say that buying a S&P CNX Nifty portfolio yields the same returns as percentage changes on the S&P CNX Nifty index. But the weights will have to keep on changing from day to day when market caps change? No. The market-cap weighted index is "self weighting". I.e. when weights change because prices change, yesterday's index portfolio continues to be today's index portfolio. Hence a buy and hold strategy is all that is required to replicate index returns under normal circumstances. Note that someone who buys and holds a S&P CNX Nifty portfolio earns dividends, this should be compared with the S&P CNX Nifty TR index and not plain S&P CNX Nifty. Top So when do weights in an index change? When corporate actions take place, the market capitalisation changes and weights have to be adjusted. Rights issues, public issues and mergers all present such problems. Of course, when index set changes take place, the portfolio has to be adjusted and weights get modified. This requires elaborate, and consistently-applied policies. These policies have been the subject of great attention and care at IISL and are fully disclosed to the public. Top What historical data for S&P CNX Nifty is available? S&P CNX Nifty and S&P CNX Nifty-TR are available from 3 July 1990 and 6 November 1995 respectively. The historical data is calculated in an intelligent way, i.e. the index set steadily evolves even through the older years. The historical Nifty and Nifty-TR are very useful for researches. Top Where do I get data for S&P CNX Nifty? Data for S&P CNX Nifty and other indices are available on the NSE website under Indices / Statistics Parents | Siblings Top Last updated on March 10, 2008. |
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