Mumbai: India Index Services & Products (IISL), an arm of NSE, will bring down the number of stocks on its benchmark index for the IT sector to 10 from May 29, a move that is expected to facilitate trading for investors.
At present, the CNX IT index, which captures the performance of Indian IT companies, has 20 stocks.
Infosys, Tata Consultancy Services, HCL Technologies, Tech Mahindra, Wipro, Oracle Financial Services Software, MindTree, Info Edge (India) Ltd, Cyient and Justdial will be the 10 scrips on the index from May 29.
According to IISL, the 10-stock index will be "easy to replicate and trade".
At the same time, IISL has also capped the maximum weightage of a single stock at 25 per cent.
"The CNX IT index is the benchmark for the Indian information technology sector representing about 93 per cent of the IT industry's free float and underlying stocks are very liquid," IISL CEO Mukesh Agarwal said.
At present, CNX IT index is calculated based on free-float market capitalisation comprising 20 stocks.
Firstsource Solutions, eClerx Services, Hexaware Technologies, KPIT Technologies, Mphasis, NIIT Technologies, Persistent Systems, Polaris Consulting & Services, Rolta India and Tata Elxsi are the 10 firms that will be excluded from the index.
Companies with more than 50 per cent of their turnover from IT-related activity are in.
Besides, the companies must rank in the top 500 on average free-float market capitalisation and aggregate turnover for the last six months, and their stocks' trading frequency should at least be 90 per cent in the last six months, besides other parameters.