The National Stock Exchange (NSE), one of India’s leading stock exchanges, has tweaked the constituents of its major indices such that three Adani Group companies are all set to enter key Nifty indices from March 31. The Adani stocks being included in Nifty indices include Adani Wilmar, which has been added to Nifty Next 50 and Nifty 100, Adani Total gas, which has been added to Nifty Shariah 25, and Adani Power, which has been added to ten different indices. The move has raised concerns given the continuing meltdown in Adani group stocks since January 24 when the US-based firm Hindenburg Research made several allegations about stock manipulation and fraud that the Adani group has denied. On the one hand, the exposure of actively managed mutual funds to Adani stocks is reported be less than 1%. But on the other, nearly 16% of India’s mutual fund industry’s ₹41 lakh crore is parked in index funds and exchange traded funds (ETFs) that mimic indices constructed by the NSE and BSE, and some of this investment will be steered to these Adani stocks from March 31. And earlier this week, the NSE also removed four Adani Group stocks from the Nifty Alpha 50 index. So, what exactly goes into the decision to include or exclude any given stock in an index? How justified is the inclusion of Adani stock in various NSE indices given the recent sharp fall in their prices? And what are the risks and options for ordinary investors?