NSE Launches 4 New Indices : What They Mean for Investors

This may be good news for investors as the National Stock Exchange decided to launch 4 new indices namely Nifty Tata Group 25 percent Cap, Nifty 500 Multicap India Manufacturing 50:30:20, Nifty 500 Multicap Infrastructure 50:30:20, and Nifty MidSmall Healthcare. In a recent circular by NSE, they proposed these 4 new indices in cash and F&O segments.

These 5 indices will be introduced as:

Let's discuss the individual composition of these 4 indices:

Nifty Tata Group 25 % Cap.

As per NSE, the Nifty Tata Group 25% Cap includes 10 companies based on the free float market capitalization method. The percentage of 25% is the rebalancing ratio i.e. At the time of rebalancing of shares, the weightage of the index constituent (where applicable) is capped at 25%.

Eligibility Criteria for companies:

1. The company should be listed on the National Stock Exchange of India Ltd. (NSE).

2. The company should be forming part of the Tata corporate group.

3. The Company must rank within the top 800 by average full market capitalization and average daily turnover for the last 6 months.

4. For a new company or a company with a recent IPO, it should fulfill the criteria for at least 3 months before inclusion in the index.

Nifty500 Multicap India Manufacturing

This index aims to track the performance of select large-cap, mid-cap, and small-cap stocks from the Nifty 500 index which are into manufacturing. The weight of the stocks is based on each stock’s free-float

market capitalization with overall weight to the large-cap segment fixed at 50%, mid-cap segment fixed at 30%, and small-cap segment fixed at 20%. Stock weights are capped at 10% at the time of index rebalancing

Eligibility Criteria for companies:

1. Stocks forming part / going to be a part of the Nifty 500 index at the time of review are eligible for inclusion in the index.

2.15 companies from large cap,25 companies from mid-cap, and 35 companies from small cap will be a part of this index based on free-float market capitalization.

3. Preference for stock inclusions will be given to shares trading on NSE’s F&Osegment.

This index is reconstituted semi-annually and rebalanced every quarter.

Nifty MidSmall Healthcare

This index comprises mid-cap and small-cap stocks within the healthcare sector. The weight of each stock is based on the stock’s free float market capitalization.

Eligibility Criteria for companies:

1. Stocks going to be a part of the Nifty MidSmallcap 400 index at the time of review are eligible.

2. Only Non-F&O in the Nifty MidSmallcap 400 hitting at least 20% circuit in the last 6 months

3. A maximum of 30 stocks are selected to be a part of this index.

This Index is re-balanced on a semi-annual basis

Nifty 500 Multicap Infrastructure

This Index represents the infrastructure theme and tracks the performance of some selected small-cap, mid-cap, and large-cap stocks in the infrastructure segment. The weight of the Small Cap, Mid Cap, and large cap is 50:30:20 respectively.

Eligibility criteria for companies.

1. There will be 15 companies from the large-cap segment, 25 from the mid-cap, and 35 from the small-cap universe

2. The companies will be chosen based on their free float market cap available for trading on NSE’s F&O segment.

3. The weight of each company will be based on free-float market capitalization.

The index rebalancing will be done both semi-annually and quarterly.

What do these indices indicate to investors?

These 4 indices will give more headroom to investors to participate in this competitive investment landscape of India. This competition has increased due to BSE coming up with different products in the F &O segment. Such index additions will lead to better competition by the NSE and an increase in the market share. We can see a significant impact of the Tata Group companies on the Indian stock market. Also with the revenue stream and stable government policies, the manufacturing sector is generating investor interest, making up a wider market participation.

How can you benefit from the NSE surge?

The recent surge in investors is a golden opportunity for the NSE. With more people joining the market, the NSE can grow its business by attracting more investors and offering new investment options.

With a massive 14.9 crore investor base, the NSE boasts much higher yearly trading volumes. In April 2024 alone, the average daily turnover at the NSE was nearly ₹14,567 crore, almost double the BSE's ₹6,298 crore.

. The NSE share price touched Rs 5000 on April 24, as compared to Rs 3600 in the same period last year. Industry experts predict continued growth for the NSE in India If you buy NSE unlisted shares, count on Stockify. We are one of India’s trusted online stock trading platforms where you can buy and sell unlisted shares in India from the comfort of your home. Connect with us to learn more about unlisted share investing.