The National Stock Exchange has decided not to include IREDA on eight key indices, including Nifty500 and Nifty Midcap150, following the firm’s non-compliance with SEBI’s portfolio concentration norms.
On February 28, as part of a periodic review of indices, the Index Maintenance SubCommittee (Equity) of NSE Indices Ltd had said Indian Renewable Energy Development Agency Ltd would be included in the Nifty 500, Nifty Midcap 150, Nifty Midcap 100, Nifty 200, Nifty LargeMidcap 250, Nifty MidSmallcap 400, Nifty Total Market and Nifty500 Multicap 50:25:25 indices with effect from March 28.
As IREDA breached one of the requirements of the SEBI Portfolio Concentration Norms for Equity Exchange Traded Funds (ETFs) and Index Funds related to impact cost, the committee has revoked its earlier decision to include IREDA, the exchange said in a release.
Impact cost represents the cost of executing a transaction in a given stock for a specific pre-defined order size at any given point of time. Impact cost is a practical and realistic measure of market liquidity; it is closer to the true cost of execution faced by a trader in comparison to the bid-ask spread.
In place of IREDA, V-Guard Industries will see its exclusion revoked and remain a part of the Nifty 500, Nifty Smallcap 250 and Nifty MidSmallcap 400. “The above change in Nifty 500 index will also be applicable to the Nifty500 Multicap 50:25:25 index, NSE added.
BSE will replace the power major in the Nifty Midcap 100, Nifty Midcap 150, Nifty 200, and Nifty LargeMidcap 250, while Jyoti CNC Automation will replace it in the Nifty Total Market.
The IREDA stock has been on a downtrend ever since it hit a high of ₹214.80 on February 6; it tumbled 2.67 per cent at ₹125.90 on the NSE.
The stock has been a trader favourite post-listing; the PSU major came out with an IPO at ₹32 in January this year.