July 11, 2024
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Stock Market

New Nifty Indices launched by NSE in this year

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Stock Market

New Nifty Indices launched by NSE in this year

The stock market plays a crucial role in economic growth, wealth creation, and investment opportunities. It enables investors to grow wealth through dividends and capital gains. The stock exchange ensures efficient capital allocation and economic expansion. Mandatory financial disclosure for listed companies encourages transparency, benefiting informed investment decisions.

Indices summarize complex data, serving as essential tools for making well-informed investment choices across various sectors. In this article, we are taken into various new indices introduced by NIFTY50 from the start of 2024 until now.

Stock Exchange

The stock exchange is a marketplace to buy and sell securities, such as stocks and bonds. The company can use its platform to raise capital by selling promoter’s shares, which helps the company invest in its operations. The exchanges facilitate price discovery in the form of demand and supply patterns. It helps with transparency and liquidity.

The exchange works with strict rules and regulations to safeguard investors and maintain fair trading practices. The primary stock exchanges in India include the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

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National Stock Exchange(NSE)

The National Stock Exchange was established in 1992. It is one of the largest stock exchanges in India and the eighth-largest stock exchange in the world by total market capitalization. The NSE has a market capitalization of $4.900 trillion as of May 2024. Its benchmark index was Nifty50.

The Nifty50 has tracked the top 50 of the largest companies listed on the NSE. It was launched on April 22, 1996. The Nifty has experienced a substantial growth of 25.69% in the last one year. Now Nifty50 is trading at an all-time high.

Why Nifty Introduces New Indices

Nifty has introduced new indices to better capture the evolving nature of the Indian stock market. It provides stronger benchmarks for specific areas of interest and investment tactics. The new indices make it easy for investors to diversify their portfolios through concentration in rising industries such as technology or green energy, alternatively having large-cap, mid-cap, and small-cap firms.

The new indices also aim to increase market efficiency, transparency, and liquidity by catering to the needs of domestic and international investors. Furthermore, the creation of these new benchmark solutions promotes a stronger and more inclusive financial ecosystem that can accommodate the diverse requirements of various market players.

How will new indices help investors?

Nifty-introduced new indices are useful for investors to expose them to specific sectors. It provides more information about investment decisions. It helps in diversifying portfolios, managing risks, and aligning investments with emerging trends like technology or green energy. These indices also enhance market transparency and efficiency, attract more investors, and boost overall market liquidity.

The Nifty New Indices Introduced After January 2024

Nifty500 Multicap India Manufacturing 50:30:20 Index

The Nifty500 Multicap India Manufacturing 50:30:20 Index tracks the performance of large, mid, and small-cap stocks from the Nifty 500 index within the manufacturing sector. Stocks are weighted by their free-float market capitalization. The index maintains a fixed allocation: 50% to large-cap, 30% to mid-cap, and 20% to small-cap stocks. Each stock’s weight is capped at 10% during rebalancing. The index launched on March 6, 2024, and includes 76 constituents.

The Nifty500 Multicap India Manufacturing 50:30:20 Index features the top 5 sector-wise distributions, including automobiles and auto components (28.24%), healthcare (19.09%), capital goods (14.56%), oil, gas & consumable fuels (12.47%), and metals & mining (10.10%).

The index’s top constituents and weights are Reliance Industries Ltd. (10.68%), Mahindra & Mahindra Ltd. (6.60%), Tata Motors Ltd. (4.14%), Sun Pharmaceutical Industries Ltd. (3.90%), Maruti Suzuki India Ltd. (3.77%), Tata Steel Ltd. (3.40%), Bharat Electronics Ltd. (2.60%), Bajaj Auto Ltd. (2.52%), Hindalco Industries Ltd. (2.40%), and Cummins India Ltd. (2.25%).

Nifty500 Multi-cap Infrastructure 50:30:20 Index

The Nifty500 Multi-cap Infrastructure 50:30:20 Index was launched on March 6, 2024, and initially has 75 constituents. The index tracks the performance of large, mid, and small-cap stocks from the Nifty 500 index within the infrastructure sector. It has maintained a weightage of 50% large-cap, 30% mid-cap, and 20% small-cap stocks. The index is capped at 10% for each stock’s weight.

The Nifty500 Multicap India Manufacturing 50:30:20 Index contains the top 5 sector-wise distributions, including oil, gas & consumable fuels (20.92%), telecommunication (13.20%), construction (11.11%), construction materials (9.73%), and power (9.04%).

The index’s top constituents and weights are Reliance Industries Ltd. (10.54%), Larsen & Toubro Ltd. (8.65%), Bharti Airtel Ltd. (8.06%), NTPC Ltd. (3.75%), Power Grid Corporation of India Ltd. (3.15%), Max Healthcare Institute Ltd. (2.82%), UltraTech Cement Ltd. (2.81%), Adani Ports and Special Economic Zone Ltd. (2.27%), Oil & Natural Gas Corporation Ltd. (2.23%), and Indian Hotels Co. Ltd. (2.20%).

Nifty Tata Group 25% Cap Index

The Nifty Tata Group 25% Cap Index was commenced on April 8, 2024, and tracks the performance of 10 Tata Group companies listed on the National Stock Exchange of India. The index uses the free float market capitalization method. It caps individual stock weights at 25%. Initially, the index had 11 constituents.

The sector-wise distribution of the Nifty Tata Group 25% Cap Index, such as IT (27.28%), automobile and auto components (17.72%), consumer durables (15.15%), consumer services (15.10%), metals & mining (12.37%), power (6.44%), and FMCG (5.95%).

The constituents of the index and their weights are TCS (25.17%), Tata Motors (15.04%), Tata Steel (12.37%), Titan Company (12.25%), Trent Ltd. (10.42%), Tata Power (6.44%), Tata Consumer Products (5.95%), Tata Hotels Company (4.68%), Voltas (2.90%), and Tata Motors DVR (2.69%).

Nifty MidSmall Healthcare Index

The Nifty MidSmall Healthcare Index measures the performance of mid-cap and small-cap healthcare stocks. It includes up to 30 stocks from the Nifty MidSmallcap 400 index, chosen based on their six-month average free-float market capitalization. Each stock in the index is weighted based on its free-float market capitalization. The index was commenced on April 8, 2024, and initially had 31 constituents. This helps investors track the healthcare sector’s mid and small-cap stocks’ performance more accurately.

The index’s top constituents and weights are Max Healthcare Institute Ltd. (14.86%), Lupin Ltd. (8.38%), Aurobindo Pharma Ltd. (7.27%), Alkem Laboratories Ltd. (5.36%), Fortis Healthcare Ltd. (5.30%), Mankind Pharma Ltd. (4.20%), Glenmark Pharmaceuticals Ltd. (3.94%), Laurus Labs Ltd. (3.57%), Biocon Ltd. (3.34%), and Ipca Laboratories Ltd. (3.25%).

Nifty EV and New Age Automotive Index

The Nifty EV & New Age Automotive Index launched on May 30, 2024, with 33 constituents. It is India’s first index-tracking companies in the electric vehicle (EV) and new-age automotive sectors, including hybrid and hydrogen vehicles. It covers the entire ecosystem, from EV manufacturing to charging infrastructure and battery production.

The sector-wise distribution of the Nifty EV & New Age Automotive Index such as automobiles and auto components (69.01%), information technology (13.48%), chemicals (8.08%), capital goods (5.07%), oil, gas & consumable fuels (4.29%) and consumer services (0.07%).

The index’s top constituents and weight are Tata Motors Ltd. (8.26%), Maruti Suzuki India Ltd. (7.91%), Mahindra & Mahindra Ltd. (7.85%), Bajaj Auto Ltd. (7.84%), Reliance Industries Ltd. (4.29%), KPIT Technologies Ltd. (4.12%), CG Power and Industrial Solutions Ltd. (4.06%), L&T Technology Services Ltd. (4.04%), Sona BLW Precision Forgings Ltd. (4.03%), and Bosch Ltd. (4.01%).

Nifty500 Equal Weight Index

The Nifty500 Equal Weight Index, launched on May 31, 2024, features 502 companies from its parent Nifty 500 Index but uses an equal weighting strategy instead of market capitalization. This means each company has the same influence on the index, offering an alternative investment approach.

The top 6 sector-wise distributions of the index include Financial Services (18.42%), Capital Goods (12.16%), Healthcare (9.22%), Chemicals (6.78%), Automobile and Auto Components (6.58%), and Fast Moving Consumer Goods (6.15%).

The index’s top constituents and weights are India Cements Ltd. (0.26%), Central Depository Services (India) Ltd. (0.23%), 360 ONE WAM Ltd. (0.23%), Titagarh Rail Systems Ltd. (0.23%), Kalyan Jewellers India Ltd. (0.23%), Ceat Ltd. (0.23%), Hitachi Energy India Ltd. (0.23%), IIFL Finance Ltd. (0.22%), Cholamandalam Financial Holdings Ltd. (0.22%), and Amber Enterprises India Ltd. (0.22%).