NSE Indices on Wednesday changed the rule to be done with the scheme of separation of business on behalf of the companies included in the index. The index provider has said that it will now retain the company which is moving towards demerger in its indices. This significant change has taken place in view of the proposal to separate the financial services unit of Reliance Industries.
Under the current rule, RIL (which has the highest weighting in the Nifty-50) has to be taken out of the index, leading to unnecessary selling by funds tracking the Nifty index.
The change may help reduce selloff in stocks included in the index that would result from the company's demerger move, the index provider said in a press release. It also said that the new method will be applicable to demerger plans that have received equity shareholders' approval on or before April 30, 2023.