Performance Trend of Nifty Commodities Index
What does the Nifty Commodities Index track?
The Nifty Commodities Index is structured to mirror the performance and dynamics of a diversified portfolio of companies within the commodities sector. This sector encompasses the oil, petroleum products, cement, power, chemicals, sugar, metals, and mining industries.
Index Methodology:
Eligibility Criteria for Selection of Constituent Stocks:
- Companies must be part of the Nifty 500 at the time of review. Suppose fewer than 10 eligible stocks represent a particular sector within the Nifty 500. In that case, additional stocks are selected from those ranked within the top 800 based on average daily turnover and full market capitalization over the past six months, as used for Nifty 500 index rebalancing.
- Companies must belong to the commodities sector.
- The trading frequency of the company should be at least 90% over the last six months.
- Companies must have a minimum listing history of one month as of the cutoff date.
- The final selection of 30 companies is based on their free-float market capitalization.
Index Re-Balancing:
The index is rebalanced semi-annually, with cutoff dates on January 31 and July 31 each year. The review process considers average data for the six months ending on these cutoff dates. Market participants are given four weeks’ notice prior to any changes.
At the time of rebalancing of shares/ change in index constituents/ change in investible weight factors (IWFs), the weightage of the index constituent (where applicable) is capped at 10%. The Nifty Commodities Index is primarily used as a benchmarking tool for fund portfolios, index funds, ETFs and other structured products.
Index Governance:
NSE indices are managed by a professional team and governed through a three-tier structure, including the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee.
What do the 1-year rolling returns look like?
What do the 3-year annualized rolling returns look like?
What does the 5-year annualized rolling returns look like?
How will the current Macro Economic Trends affect future performance?
Macro-economic trends, such as fluctuating interest rates and geopolitical events can significantly impact the Nifty Commodities Index. Changes in interest rates affect borrowing costs and investment flows, influencing the financial performance and capital expenditure of companies in the commodities sector.
For instance, higher interest rates can increase costs for companies reliant on debt financing, potentially dampening growth and profitability. Meanwhile, various hostile conflicts can disrupt global supply chains, particularly in energy and raw materials, leading to volatility in commodity prices.
This instability can affect the revenue and stock prices of companies within the index, impacting the overall performance of the index due to these fluctuations. Investors in the Nifty Commodities Index must remain vigilant to these macro-economic factors, which can drive significant shifts in market dynamics.
How to invest in this index?
Are there any mutual funds or index funds that allow me to get an exposure to this Index?
While mutual funds and index funds are the one of the best ways to invest into certain indices, there are no mutual funds that allow you to get direct exposure to this index.
Are there any ETFs that allow me to get exposure to the Index?
Yes! You will be able to invest in this fund with the following ETFs
- ICICI Prudential Nifty Commodities ETF
Index constituents
| Company | Percentage allocation | Sector and industry |
| Reliance Industries | 10.06% | Oil, Gas & Fuels |
| NTPC | 8.98% | Energy |
| Tata Steel | 7.23% | Metals & Mining |
| UltraTech Cement | 6.34% | Building Materials |
| Oil & Natural Gas Corporation | 5.88% | Oil, Gas & Fuels |
| Coal India | 5.57% | Oil, Gas & Fuels |
| Grasim Industries | 4.75% | Building Materials |
| Hindalco Industries | 4.61% | Metals & Mining |
| JSW Steel | 4.46% | Metals & Mining |
| Adani Green Energy | 3.76% | Energy |
| Tata Power Company | 3.76% | Electric Utilities |
| Indian Oil Corporation | 3.47% | Oil, Gas & Fuels |
| Bharat Petroleum Corporation | 3.24% | Oil, Gas & Fuels |
| Adani Power | 2.78% | Energy |
| Pidilite Industries | 2.59% | Chemicals |
| SRF | 2.09% | Chemicals |
| Ambuja Cements | 2.05% | Building Materials |
| Vedanta | 2.05% | Metals & Mining |
| Shree Cement | 1.93% | Building Materials |
| Jindal Steel & Power | 1.76% | Metals & Mining |
| PI Industries | 1.75% | Chemicals |
| Adani Energy Solutions | 1.74% | Electric Utilities |
| Hindustan Petroleum Corporation Ltd | 1.71% | Oil, Gas & Fuels |
| APL Apollo Tubes | 1.50% | Metals & Mining |
| UPL | 1.29% | Chemicals |
| Steel Authority of India | 1.09% | Metals & Mining |
| ACC | 0.95% | Buildings Materials |
| Tata Chemicals | 0.95% | Chemicals |
| Dalmia Bharat | 0.86% | Buildings Materials |
| Deepak Nitrite | 0.82% | Chemicals |
Conclusion:
The Nifty Commodities Index is a vital barometer for gauging the performance of the commodities sector within India’s financial markets. It provides a diversified representation of key industries, offering investors a comprehensive view of the sector’s dynamics. The index’s semi-annual rebalancing ensures its continued relevance and accuracy, while its governance structure upholds rigorous standards.
However, it remains susceptible to macro-economic influences such as interest rate fluctuations and geopolitical events, underscoring the importance of staying informed about global economic trends. Overall, the Nifty Commodities Index is an essential tool for investors seeking exposure to the commodities sector and for benchmarking various financial products.