S&P BSE Private Banks Index

What is BSE PRIVATE BANKS INDEX?

BSE PRIVATE BANKS INDEX is a thematic index on the Bombay Stock Exchange (BSE) which captures the performance of the private banks listed in India. It consists of 12 common stocks from the S&P BSE Finance/Financial Services index, which have been classified as banks as per BSE’s Sector Classification Model. This will exclude the company stocks that are classified as PSUs.

This BSE PRIVATE BANKS INDEX was launched on August 27, 2018, with the first value date as September 16, 2005, and with base value at 1000. Since its inception, the S&P BSE PRIVATE BANKS INDEX share price has breached the levels of 13,000 at ~18.86x P/E multiples. The weighted average carbon intensity of the PRIVATE BANKS INDEX is 29.49.

The index value is calculated based on a float-adjusted, market-cap-weighted method at the end of the day. It is reconstituted semi-annually in the months of March and September, while the weight caps are rebalanced every quarter. A two-stock buffer is maintained while selecting the constituents.

S&P BSE PRIVATE BANKS INDEX is published by Asia Index Private Ltd-which is a joint venture of S&P and BSE Ltd-. This index is managed and governed by the S&P BSE Index Committee. 

The BSE PRIVATE BANKS INDEX is calculated in two currencies: INR and USD; for USD, spot foreign exchange rates are applied from Refinitiv’s data. It has an index variant in the form of S&P BSE PRIVATE BANKS INDEX TR for both the currencies.

How is BSE PRIVATE BANKS INDEX calculated? How are stocks selected for inclusion in BSE PRIVATE BANKS INDEX?

The BSE PRIVATE BANKS INDEX share price is computed by weighting its 12 stocks based on float-adjusted market capitalization, using the divisor methodology of the S&P Dow Jones equity indices. The individual stocks are capped at 33% weight, and the top 3 index constituents are not expected to exceed 63% weightage in aggregate. In case of cap breaches, excess weight is proportionately redistributed among all the uncapped stocks.

The securities must fulfil the following eligibility criteria to be included in the BSE PRIVATE BANKS INDEX:

1. Should be domiciled in India and listed on the Bombay Stock Exchange.
2. Should form a part of S&P BSE Finance index.
3. Should form a part of the PRIVATE BANKS INDEX sector as per the BSE Sector Classification System.
4. Only common stocks can be included in the BSE PRIVATE BANKS INDEX, i.e., DVRs cannot form a part of this index.
5. Should have an annualized trade value of at least INR 500 million/ 400 million and a turnover ratio of at least 10%/8% for newly eligible stocks/ current stocks, respectively, at the time of rebalancing of the index.
6. Should not have more than 5 non-trading days in the past 6-month period.
7. Top 10 stocks ranked by average 6-month daily free float market cap are compulsorily included. The remaining 2 stocks are selected from the ones ranking 11-14 based on the highest rank.
8. Companies that have undergone a sector classification change shall be excluded at quarterly rebalancing dates.
9. Companies that have undergone mergers, takeovers, delisting, suspensions, GSM etc., are deleted even in-between semi-annual reconstitution.

The index value is calculated as follows –

Index value = Index Market Value / Divisor

Where,

Index Market Value = Price * Shares * IWF (Float Factor) * Fx Rate

Divisor = Index Market Value after rebalancing / Index Value before rebalancing

The BSE PRIVATE BANKS INDEX is reconstituted semi-annually in March and September, with closing dates of third Friday of February and August being the reference date. The index weights are rebalanced quarterly in the months of March, June, September, and December. In addition, the index rules are checked for consistency with the SEBI norms on a quarterly basis.