NSE Indices launches new equal weight index for defence stocks
The range of benchmark options for passive investment products focused on India's defence sector is expanding. NSE Indices Limited has introduced a new thematic index called Nifty India Defence Equal Weight, which can be tracked by asset managers and passive funds such as ETFs and index funds.
Highlights
- NSE Indices Limited has launched the Nifty India Defence Equal Weight index with a base date of April 2, 2018, assigning equal weight to all stocks.
- The index will be reconstituted semi-annually and weights will be rebalanced quarterly in March, June, September, and December each year.
- This index will serve as a benchmark for asset managers and provide sector-specific diversification options for passive investment products including ETFs and index funds.
This article was translated from the original. Read the original version by our correspondent here.
Index Structure and Rebalancing Framework
As per the press release issued by NSE India, according to NSE's index services unit NSE Indices Limited, the new Nifty India Defence Equal Weight index is designed to track the performance of stocks included in the base Nifty India Defence Index. Its objective is to reflect the movement of a portfolio of stocks that broadly represent the defence theme, using an equal weight methodology.Stocks are selected from the Nifty Total Market Index for eligibility. Stocks may be included if they are part of eligible core industries or derive at least 10% of their revenue from the defence sector, with all stocks in the index assigned equal weight.
The index's base date is April 2, 2018, and its base value is set at 1000. The index is reconstituted semi-annually, while weights are rebalanced quarterly in March, June, September, and December.
Utility for Asset Managers and Passive Funds
This new index is expected to serve as a benchmark for asset managers. Additionally, it can be tracked as a reference index for upcoming passive investment products such as Exchange Traded Funds, index funds, and structured products.Amid growing investor interest in the defence sector, the equal weight structure offers a differentiated option for products seeking to reduce reliance on one or a few large stocks. This further expands the range and breadth of sector-specific products in India's thematic index segment.
Our previous report discussed the launch of the Nifty Next 100 index by NSE Indices Limited, which tracks the performance of 100 stocks selected from the Nifty Next 50 and Nifty Midcap 150. That article highlighted its free-float market-cap weighting, base date of October 1, 2010/base value of 1000, semi-annual rebalancing in March and September, and its potential benchmark role for ETFs, index funds, and structured products.
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