NSE comes up with 4 new indices Under Capital Markets and F&O

On April 3, 2024, the National Stock Exchange (NSE) introduced four new indices across both the cash and futures and options segments, effective from April 8.

Among the indices slated for release are the Nifty Tata Group 25% Cap, Nifty500 Multicap India Manufacturing 50:30:20, Nifty500 Multicap Infrastructure 50:30:20, and Nifty MidSmall Healthcare.

The following table shows the Indices and their broadcast names:

The exchange announced its decision through a circular issued on Wednesday, emphasizing that the indices’ broadcast will be accessible to F&O members via NEAT+ terminals, specifically under the multiple index inquiry screen.

This move by the NSE reflects its commitment to expanding its index offerings and enhancing accessibility for market participants

Nifty Tata Group 25% Cap

The Nifty Tata Group 25% Cap Index includes 10 companies and is calculated based on the value of their freely traded shares. When it’s time to adjust the index, changes are made to the shares, companies included, or factors affecting investment weights. If needed, a company’s share of the index is limited to 25%. This index, along with its variation called the Nifty Tata Group Index, is used for different reasons like comparing fund performance and making it easier to create investment products like ETFs.

The top four constituents by weightage above 10% in the index are Tata Consultancy Services Ltd. with a significant allocation of 24.53%, followed by Tata Motors Ltd. at 16.11%, Titan Company Ltd. at 14.62%, and Tata Steel Ltd. at 11.83%.

Nifty500 Multicap India Manufacturing 50:30:20

The Nifty500 Multicap India Manufacturing 50:30:20 Index aims to track the performance of select large-cap, mid-cap, and small-cap stocks from the Nifty 500 index that represent the manufacturing theme.

The index, established with a base date of April 01, 2005, and a base value of 1000, selects stocks for inclusion based on certain criteria. Companies eligible for inclusion in the Nifty 500 index at the time of review are drawn from various market segments. This includes 15 companies from the large-cap universe (comprising stocks in the Nifty 100), 25 companies from the mid-cap universe (comprising stocks in the Nifty Midcap 150), and 35 companies from the small-cap universe (comprising stocks in the Nifty Smallcap 250). Selection is based on free-float market capitalization from the eligible universe, with preference given to stocks available for trading on the NSE’s F&O segment.

The index maintains a fixed allocation across different market segments, with 50% allocated to large-cap stocks, 30% to mid-cap stocks, and 20% to small-cap stocks. The weight of each stock in the index is determined by its free float market capitalization, with a maximum cap of 10% to ensure diversification.

The top six constituents by weightage above 4% in the index are Reliance Industries Ltd., accounting for 9.96% of the total weight. Following closely behind are Sun Pharmaceutical Industries Ltd. and Tata Motors Ltd., each contributing 4.88%. Additionally, Mahindra & Mahindra Ltd. and Maruti Suzuki India Ltd. hold significant weight, making up 4.80% and 4.64% respectively.

Nifty500 Multicap Infrastructure 50:30:20

The Nifty500 Multicap Infrastructure 50:30:20 Index aims to track the performance of select large-cap, mid-cap and small-cap stocks from the Nifty 500 index that represent the infrastructure theme.

The index selects stocks for inclusion based on their presence in the Nifty 500 index during review periods. The selection criteria encompass 15 companies from the large-cap universe (Nifty 100 constituents), 25 from the mid-cap universe (Nifty Midcap 150 constituents), and 35 from the small-cap universe (Nifty Smallcap 250 constituents). Selection prioritizes stocks with free-float market capitalization, particularly those available for trading on NSE’s F&O segment.

Maintaining a balanced representation, the index allocates 50% weight to the large-cap segment, 30% to mid-caps, and 20% to small-caps. Each stock’s weight in the index is determined by its free-float market capitalization, with a maximum cap of 10%.

The top three constituents by weightage above 5% in the index are Larsen & Toubro Ltd. with 10.35%, Reliance Industries Ltd. with 10.07%, and Bharti Airtel Ltd. with 7.27%. These companies represent significant portions of the index, with Larsen & Toubro Ltd. holding the highest weightage.

Nifty MidSmall Healthcare index

The Nifty MidSmall Healthcare index tracks the performance of mid-cap and small-cap stocks belonging to the healthcare sector.

To be included in the Nifty MidSmallcap 400 index, stocks must either currently be part of it or be on track for inclusion. Selection of the 30 stocks is contingent upon their free-float market capitalization within the sector universe, subject to availability.

The weightage of each stock in the index is determined by its free-float market capitalization. At the time of rebalancing, no single stock’s weight can exceed 33%, and the cumulative weight of the top three stocks cannot surpass 62%.

The top five constituents of the index by weightage above 5% include Max Healthcare Institute Ltd., with a significant weightage of 14.26%. Following closely behind is Lupin Ltd., contributing 9.19% to the index weightage. Aurobindo Pharma Ltd. holds a weightage of 7.21%, while Alkem Laboratories Ltd. and Fortis Healthcare Ltd. contribute 5.84% and 5.15% respectively.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.