Nifty Pharma Stocks List With Weightage in 2024

Last updated on July 2, 2024

The Nifty Pharma Index captures the performance of the pharmaceutical sector. The Index comprises 20 companies listed on the National Stock Exchange of India (NSE).

In this article, we have compiled a Nifty Pharma stocks list with weightage which is periodically updated. Nifty Pharma companies index can be used to benchmark fund portfolios, and launching of index funds, ETFs, and structured products.

What is the Nifty Pharma index?

The Nifty Pharma Index is designed to reflect the behavior and performance of the companies that are engaged in the manufacturing of pharmaceuticals and biotechnology companies. Effective 30 September 2021, the index comprises a maximum of 20 stocks. The index has a base date of 1 January 2001 indexed to a base value of 1000 but it was launched only in July 2005.

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Nifty Pharma Companies Re-Balancing

Constituent companies in the Nifty Metal Index are re-balanced on a semi-annual basis. The cut-off date is 31 January and 31 July of each year, i.e. for semi-annual review of indices, average data for 6 months ending the cut-off date is considered.

A prior notice of at least four weeks is given to the market from the date of the change. As a result, changes made on 31 January will be effective from 31 March.

Index Governance

A professional team manages all NSE indices. There is a three-tier governance structure comprising the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee.

Nifty Pharma Index: Key Drivers

Despite strong domestic demand and a fairly diversified portfolio, the Pharma industry in India involves cycles, often running over several years. This is largely because the industry is heavily regulated and India exports nearly 40% of its pharma production, making it one of the largest suppliers of generic drugs to the world. As a result, companies often find it difficult to preserve their balance sheets amid ever-stringent regulations in developed markets. Out of the top companies in this industry, only a few such as Divi’s Laboratories have demonstrated consistent performance.

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Nifty Pharma Weightage

In terms of weightage, the top companies in the Nifty Pharma Stocks list are Sun Pharmaceutical Industries 24.11%, Dr. Reddy’s Laboratories 11.45%, Cipla Ltd 11.41%, and Divi’s Laboratories 8.60%.

Nifty Pharma Stocks List With Weightage 

Nifty Pharma Index Vs Other Sectoral Indices 

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Nifty Pharma Stocks List: Eligibility Criteria 

• Companies should form part of the Nifty 500 at the time of review. In case, the number of eligible stocks representing a particular sector within the Nifty 500 falls below 20, then the deficit number of stocks shall be selected from the universe of stocks ranked within the top 800 based on both average daily turnover and average daily full market capitalization based on previous six months period data used for index rebalancing of Nifty 500.
• Companies should form a part of the pharmaceutical sector.
• The company’s trading frequency should be at least 90% in the last 6 months. 
• The company should have a listing history of 6 months. A company, which comes out with an IPO will be eligible for inclusion in the index if it fulfills the normal eligibility criteria for the index for 3 months instead of 6 months.
• The final selection of 20 companies shall be done based on the free-float market capitalization of the companies. A preference shall be given to companies that are available for trading in NSE’s Futures & Options segment at the time of final selection.
• The weightage of each stock in the index is calculated based on its free-float market capitalization such that no single stock shall be more than 33% and the weightage of the top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing.

Nifty Pharma Stocks List: Eligible Basic Industries 

Companies from the following industries are eligible to be considered for inclusion in the Nifty Pharma Index List: 

• Biotechnology
• Pharmaceuticals
• API manufacturers

Conclusion

As the industry caters to the basic needs of consumers, it plays an important role in the Indian economy and weighs nearly 4.15% in the Nifty 50 Index. While this industry benefits from robust and inelastic demand, it is heavily regulated, and regulatory changes often wreak havoc for companies in this domain. Therefore, equity investments in the pharma sector should be made after careful consideration of valuation and demand scenarios.

Nifty Pharma Index Weightage FAQs