BSE Launches Four New Large-Cap Factor Indices

The Bombay Stock Exchange’s index arm, BSE Index Services, has introduced four new factor indices designed to give investors more structured ways to track different investment styles within the large-cap segment. These indices are built from the BSE 100 large-cap total market capitalisation (TMC) universe and come with a 5% stock-level cap.

What Are the New Indices?

BSE has launched the following four factor-based indices:

1. BSE Large-Cap 100 Momentum 30 Index

This index tracks 30 companies that have shown strong and consistent price momentum. These stocks are selected based on momentum scores, and their weights are also assigned according to these scores.

2. BSE Large-Cap 100 Low Volatility 30 Index

This index focuses on stability. It features 30 companies with the lowest price volatility within the BSE 100 large-cap universe. Stocks with lower volatility receive higher weights.

3. BSE Large-Cap 100 Enhanced Value 30 Index

This index includes 30 large-cap companies that appear most attractively valued. The selection and weighting depend on value scores based on valuation metrics.

4. BSE Large-Cap 100 Quality 30 Index

This index tracks 30 companies that score high on quality factors such as steady earnings and financial strength. Constituents are selected and weighted using these quality scores.

How Are the Indices Structured?

All four indices:

• Are reconstituted every quarter
• Have a base value of 1,000
• Use June 20, 2005, as their first value date
• Include additional filters to ensure adequate liquidity
• Follow a score-based weighting approach instead of traditional market-cap weighting

Why These New Indices Matter

These factor-based indices can support a range of investment products and strategies. Asset managers can use them to create passive investment options such as index funds and ETFs. Portfolio managers and mutual fund houses may also use them as benchmarks for strategies built around momentum, value, low volatility, or quality.

For retail investors, these indices offer clearer ways to understand and access different types of stock selection methods within the large-cap space.

Conclusion

With the launch of these four new factor indices, BSE has expanded its suite of tools for investors and fund managers. The indices bring more transparency and structure to factor investing in the large-cap market and may help investors explore new ways of building diversified portfolios.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.