Nifty Smallcap 50

What is NIFTY Smallcap 50?

NIFTY Smallcap 50 is a broad-based index on the National Stock Exchange (NSE) which captures the performance of the small-cap segment of the equities market. It is an index of 50 stocks that are selected on the basis of the average daily turnover from NIFTY Smallcap 250 index’s top 100 companies ranked on full market capitalisation. These stocks span 16 sectors of the economy, with Financial Services representing a third of the index. It is followed by IT, Chemicals, Consumer Durables, and Telecommunications. These top 5 sectors together account for more than two-thirds of the index (~70%).

Almost 2% of float-adjusted market capitalisation on NSE is represented by NIFTY Smallcap 50 index. In the last six months, the traded value of all NIFTY Smallcap 50’s constituents has approximated 4.7% of the total traded value of all stocks on NSE.

This NIFTY Smallcap 50 index was launched on April 01, 2016, with the base date as April 01, 2005, and the base value at 1000. The NIFTY Smallcap 50 share price since inception has breached the levels of 3900 at ~22 P/E multiples. It is reconstituted on a semi-annual basis.

The NIFTY Smallcap 50 index is owned and managed by NSE Indices Limited, previously known as India Index Services & Products Limited. The Smallcap index is governed by a three-tier structure that comprises the BOD of NSE Indices, the Index Advisory Committee and the Index Maintenance Sub-Committee.

NIFTY Smallcap 50 has a variant in the form of the NIFTY Smallcap 50 Total Returns Index. This index has various applications in the form of benchmarking of fund portfolios and launching index funds, ETFs, and structured products.

Nifty Smallcap 50 Stocks Selection Criteria

The NIFTY Smallcap 50 share price is calculated by weighting on the basis of free-float market capitalisation, its 50 stocks relative to a base market capitalisation value on a real-time basis.

For introduction in the NIFTY Smallcap 50 index, the companies must fulfil the following eligibility criteria:

1. It will be listed on the National Stock Exchange.
2. Will constitute a part of NIFTY Smallcap 250 stocks.
3. Will include the securities from the NIFTY Smallcap 250 universe, if they rank among the top 30 from the top 100 stocks that are selected based on full market capitalisation.
4. Will exclude securities if their rank falls below 130 from NIFTY Smallcap 250 universe based on full market capitalisation.
5. Will exclude securities even if they feature among the top 130 in the NIFTY Smallcap 250 universe based on full market capitalisation, but rank below 80 based on average daily turnover.
6. Will exclude securities if they are replaced from NIFTY Smallcap 250 index.
7. A newly listed security’s eligibility is verified based on the data for three months instead of six months.

How is Nifty Smallcap 50 Value Calculated?

The index value is calculated as follows –

Index value = Current market capitalisation/ (Base market capitalisation * Base Index Value)

The NIFTY Smallcap 50 index is reviewed semi-annually based on six months of data in the months of January and July each year. The replacement of stocks (if any), subject to a maximum of 10 in a given year, is implemented from the last trading day of March and September.