BSE New Index Launch
Recently, BSE launched four new large-cap factor indices. Factor indices are measured on factors such as Value, Momentum, Quality, or Low Volatility, rather than the traditional approach of measuring by capitalisation. All four of these indices are derived from the BSE 100 large-cap Total Market Capitalisation index.
These indices will help investors in using different investment strategies within the large-cap space.
The 4 indices are as follows.
- BSE LargeCap 100 Momentum 30
- BSE LargeCap 100 Low Volatility 30
- BSE LargeCap 100 Enhanced Value 30
- BSE LargeCap 100 Quality 30
1.. BSE LargeCap 100 Momentum 30
This index will track the top 30 companies within the BSE LargeCap 100 index, which shows strong and persistent relevant price performance in recent times. This index will select the companies depending on their momentum score.
2.. BSE LargeCap 100 Low volatility 30
As the name suggests, this index will track 30 low-volatility companies within the BSE LargeCap 100 index. In short, this index focuses on stability. By following this index investor can find out the most stable and low-volatile companies across the BSE LargeCap 100.
3.. BSE LargeCap 100 Enhanced Value 30
This index will help to track the top 30 companies that are available at an attractive valuation. This index is helpful for value investors looking to trace top value stocks across the BSE large-cap 100. It will calcuate value score of each company, and the top selected companies are included in the index. This index will take into consideration different parameters of the company, like P/E, P/B, and P/S ratios.
4.. BSE LargeCap 100 Quality 30
This index will select the top 30 quality companies on their quality score. The quality score takes into consideration factors like steady earnings, high profitability, and financial strength. Helps to detect the top 30 quality companies across the BSE Largecap 100.
Comparative charts of 4 New Large-Cap Factor Indices by BSE
| Index Name | Primary Factor | Components | Weighting Method | Focus/Strategy |
| BSE LargeCap 100 Momentum 30 | Momentum | 30 companies | Score-based (Momentum Score) | Tracks companies showing strong and persistent relative price performance in the recent past. |
| BSE LargeCap 100 Low Volatility 30 | Low Volatility | 30 companies | Inverse Volatility Weighting | Measures the performance of the 30 least volatile companies, focusing on stability. |
| BSE LargeCap 100 Enhanced Value 30 | Enhanced Value | 30 companies | Score-based (Value Score) | Tracks companies with the most attractive valuations based on metrics like P/E, P/B, and P/S ratios. |
| BSE LargeCap 100 Quality 30 | Quality | 30 companies | Score-based (Quality Score) | Measures the performance of companies with high quality factors such as steady earnings, high profitability, and financial strength. |
The important details about 4 new indices
- Universe: All four indices draw their constituents from the BSE 100 large-cap Total Market Capitalisation (TMC) Index. This means they select from the largest, most liquid companies on the BSE exchange.
- Number of Constituents: Each index holds 30 stocks.
- Reconstitution: All four indices are reset on a quarterly basis.
- Capping: A 5% stock-level capping is applied, which helps reduce over-concentration risk in a single stock.
- Base Value & Date:
- Base Value: 1,000
- First Value Date: June 20, 2005
Significance of these indices.
These factor-based indices will help investors in both passive and active investing.
- Passive Strategies: They provide clear benchmarks for launching passive investment products like Exchange-Traded Funds (ETFs) and Index Funds. This allows retail and institutional investors to easily gain exposure to specific investment styles (Momentum, Value, Quality, Low Volatility) within the stable large-cap segment.
- Benchmarking: Portfolio Management Services (PMS), Mutual Funds, and fund portfolios can use these indices to benchmark their performance against specific factor strategies.
- Wider Opportunities: The launch will offer investors to use a broader spectrum of structured, transparent, and rule-based strategies in the Indian equity market.
Frequently Asked Questions
1.. What are the new BSE indices launched?
The 4 indices are as follows.
- BSE LargeCap 100 Momentum 30
- BSE LargeCap 100 Low Volatility 30
- BSE LargeCap 100 Enhanced Value 30
- BSE LargeCap 100 Quality 30
2.. What is BSE LargeCap 100 Momentum 30 Index
This index will track the top 30 companies within the BSE LargeCap 100 index, which shows strong and persistent relevant price performance in recent times. This index will select the companies depending on their momentum score.
3.. What is BSE LargeCap 100 Low Volatility 30 Index
As the name suggests, this index will track 30 low-volatility companies within the BSE LargeCap 100 index. In short, this index focuses on stability. By following this index investor can find out the most stable and low-volatile companies across the BSE LargeCap 100.
4.. What is BSE LargeCap 100 Enhanced Value 30 Index
This index will help to track the top 30 companies that are available at an attractive valuation from the BSE large-cap 100 index. This index is helpful for value investors looking to trace top value stocks across the BSE large-cap 100. It will calcuate value score of each company, and the top selected companies are included in the index. This index will take into consideration different parameters of the company, like P/E, P/B, and P/S ratios.
5.. What is BSE LargeCap 100 Quality 30 Index
This index will select the top 30 quality companies on their quality score. The quality score takes into consideration factors like steady earnings, high profitability, and financial strength. Helps to detect the top 30 quality companies across the BSE Largecap 100.
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