NSE launches Nifty India small-cap index

Nov 28th, 2017 | By | Category: Equities

India Index Services & Products (IISL) has launched the Nifty SME Emerge Index, measuring the performance of small and medium enterprises listed on National Stock Exchange of India’s (NSE’s) ‘Emerge’ platform, a dedicated NSE platform for small companies.

NSE launches Nifty India small-cap index

The Nifty SME Emerge Index represents approximately 62% of the total market cap of SMEs listed on NSE’s Emerge platform.

According to NSE, small and medium enterprises (SMEs) play a crucial role in the growth of the Indian economy by producing a diverse range of products & services and creating employment opportunities.

The index represents approximately 62% of the full market capitalisation of all SMEs listed on the Emerge after screening out firms with insufficient trading liquidity. Constituents are weighted by free float market capitalization and the index is reconstituted on a quarterly basis.

Mukesh Agarwal, IISL chief executive, commented: “The index is a well-diversified basket of SMEs spread across 14 sectors with services, IT, and consumer goods as the top three sectors by weight. As the number of SMEs listed on the Emerge increases, we’ll launch more variants of SME indices to meet the needs of various investors.”

Since inception in December 2016, the index has risen a whopping 39% to 15 November 2017.

The index can be used to meet the benchmarking needs of investors seeking to track the performance of SMEs listed on the Emerge. Given the screening process to enhance index liquidity, the index may also be used as the underlying for future product development, including for ETFs.

ETFs currently listed in Europe that track Indian equities tend to focus on the large-cap segment of the market. The largest is from Lyxor – the $1.6 billion Lyxor UCITS ETF MSCI India ETF (INRL LN) – which tracks the broad-based MSCI India Index. It is also one of the most expensive at 0.85% per annum.

The cheapest to track the MSCI India Index is the X-tracker MSCI India Index UCITS ETF (XCS5 GR) from Deutsche Asset Management. The fund has $180m in assets under management and a TER of 0.75%. Both funds are synthetically replicated.

Alternatively, the WisdomTree India Quality UCITS ETF (EPIQ LN) offers smart beta exposure to Indian equities with a focus on quality companies. Its TER is 0.73% and its AUM is $9.1m

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