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1. What is SX40? 

SX40 is the agship index of MCX Stock Exchange (MCX-SX). It is a free- oat based index of 40 large-cap liquid stocks, representing diverse sectors of the economy. 

2. What are the objectives of creating SX40? 

SX40 has been designed with the following objectives: 

• To be the true benchmark of the underlying equity market with well-diversified representation of overall market sentiments. 

To act as a performance benchmark for fund managers. 

• To facilitate accurate replication of the index and be the preferred index for creation of index linked products like index funds, ETFs, etc. 

• To uniquely position the index for efficient derivatives trading owing to superior liquidity parameters with a diversified representation of the market (using ICB, the global industry classification system of the FTSE Group). 

3. What is unique about SX40? 

SX40 has adopted the Industry Classification Benchmark (ICB), the global company classification standard of the FTSE Group, which makes SX40 the only index to have optimum representation of various industries and sectors of the Indian economy. Further, introduction of cap weights at the industry level minimizes industry bias and enhances the index stability. 

4. What are the criteria for selection of stocks? 

SX40 would comprise of stocks that conform to the below terms and conditions: 

• Constituent stocks must be exchange traded 

• Only common stocks which are of equity in nature will be eligible for inclusion in the index 

• The stock must have free float of at least 10% 

• The stock must have a positive net-worth 

• Constituent stocks must be within top 100 rankings when arranged in terms of average trading value for the preceding three months (henceforth termed as review period) on the exchange and must have been traded on at least 90 percent of the trading days during the review period. 

From the basket of the shortlisted 100 stocks, the top 40 stocks in terms of average free float market capitalization (subject to meeting industry capping criteria of 20% (± 2%) would form the index basket. 

The industry classification is based on ICB®, the leading global Industry Classification system from FTSE. 

5. What are the criteria for inclusion / exclusion of securities into / from SX40? 

The rules for inclusion or exclusion of a company in / from the index during the semi-annual review process have been designed to provide stability in selection of constituents while ensuring that the index would continue to be representative of the market by including or excluding those companies whose free float market capitalization would have risen or fallen significantly. 

Index Replacement Pool: 

An index replacement pool is created of top 100 stocks measured in terms of average daily trading value for the preceding three months (review period), which have traded on at least 90 per cent of the trading days during the review period. 

Exclusion Criteria: 

• A stock will be excluded from the index in the semi-annual review, if it does not appear in the Index replacement pool. 

• A stock will be excluded from the index in the semi-annual review if it does not appear in top 50 stocks in terms of average free float market capitalization during the review period. (This would not be applicable if better alternative is not available) 

• Companies that are involved in merger/demerger, acquisition or significant restructuring would be excluded from the index. 

Inclusion Criteria:

• A stock appearing within top 30 in terms of average free float market capitalization during the review period will be automatically included in the index, subject to industry capping. As a result, a company with lowest free oat market capitalization in the existing index basket will be excluded. 

• A stock with highest free float market capitalization from the replacement pool would be considered to replace the outgoing stock. 

6.When is the periodic review done? 

The Index will be reviewed and rebalanced twice in a calendar year, during April (review period: January 

– March) and October (review period: July – September). In case of a special situation dictated by corporate events or adverse market movements, intermediate review would be carried out for necessary modification of the index. 

7.How is SX40 computed? 

SX40 is calculated on real time whenever there is a change in price. SX40 is computed based on the traded prices of the constituent stocks on MCX-SX. In the absence of trade in the constituent stock(s), the mid-point of best Bid and best Ask quote would be considered for SX40 computation. 

8.When do weights of individual securities in SX40 change? 

The weight of each stock in the index is directly proportional to its free-float market capitalization. Hence, whenever there is a change in the price of an individual stock, the weights change. The index movement is dependent on the movement of prices of the stocks in the index. 
Apart from this, the weights of individual securities also change whenever there are any corporate actions such as, but not limited to, share changes and stock price adjustments due to restructurings or spin-o s, right issues, etc. In such cases, in order to prevent the value of the index from getting distorted, the divisor adjustment is done.

In other words, the index value should move up or down only when there is a change in price and not in other cases.

9. Who maintains SX40? 

The index is maintained by MCX-SX. Index rules are overseen by an independent index committee comprising of leading industry professionals, academicians and financial experts. 

10. Where can I  nd the details of index constituents of SX40? 

Details of index constituents and weights are available on the MCX-SX website. 

11. How is the closing price of SX40 determined? 

The closing price of the SX40 is computed based on closing price of the constituents stocks. The closing prices of constituent stocks are calculated by taking the weighted average prices during the last 30 minutes of trading. If there are no trades in last 30 minutes then the last traded price during the day is considered as closing price. If any constituent stock is not traded on the exchange during the day, then closing price of the stock on the reference exchange is considered as the closing price. 

12. What are the variants of SX40? 

There are two variants of SX40, viz. Price Return Index and Total Returns index. While the exchange would provide Total Returns Index values on a daily basis (end of day), the Price Return Index values would be calculated and disseminated on real-time basis. 

13. Is there any historical data available for SX40? 

Index values for Price Return Index and Total Returns Index are available from March 31st, 2010 onwards. 

14. Where can I get more information about SX40? 

More information about SX40 is available on the MCX-SX website.