As we discussed in earlier part of this tutorial that every index required a regular upkeep or maintenance that involved tracking of every constituents of the index that could change the continuity of the index calculation. It is equally important to test the constituents against the eligibility criteria on an on-going basis. As capital market is dynamic, it is important to include most eligible companies to ensure due representation in the index. In order to make a continuous evaluation of constituents and non-constituent, all the indices are reviewed against the eligibility criteria applicable for each index.

The periodicity for review of each index at IISL differs. Depending on theme of each index, review frequency varies from monthly to annual basis. Review of Nifty and other broad indices is carried out on semi-annual basis. Eligibility pool is prepared based on data for the period ending January 31 and July 31 of each year.

As per the regulatory requirement as prescribed by the Securities and Exchange Board of India (SEBI), any change in the composition of the index that is traded under derivatives segment at NSE, prior notification of four weeks needs to be made to the market participants.