NCDEX launches NDEX and FINNDEX to expand into equity benchmarks

The methodology seeks to capture company size, liquidity and market behaviour in selecting and weighting constituents.Live EventsThe final constituent weights combine free-float market-capitalisation weights and composite-score weights equally. Individual stocks are capped at 15% at each rebalancing to limit concentration risk and improve diversification.The indices will be reviewed and rebalanced twice a year, in March and September, with provisions for ad-hoc reconstitution under specified circumstances.

Both have January 2010 as their base month and a base value of 10,000.NCDEX owns the indices, while NSE Indices Ltd will calculate and maintain them. Index values will be disseminated in real time during market hours through NCDEX’s data feeds, website and periodic factsheets.Commenting on the launch, Vikas Goel, MD and CEO of NCDEX, said the rollout of NDEX and FINNDEX was an important milestone in the exchange’s transition into a multi-segment institution.“Our expansion into the equity and equity derivatives segment is a part of our vision to build a broader market institution that responds to the changing needs of India’s financial ecosystem,” Goel said.He added that transparent and well-designed benchmarks would become increasingly important as Indian capital markets deepen and attract greater domestic and international participation.

The indices, he said, aim to support informed investment decisions and expand the tools available to market participants.Tojo Banerjee, chief of equity business at NCDEX, said the indices offer a differentiated approach to index construction by looking beyond market capitalisation to incorporate factors that influence stock selection and market behaviour.FINNDEX, in particular, is designed to reflect the expanding diversity of India’s financial ecosystem, including capital markets, non-banking financial companies (NBFCs) and fintech businesses, alongside traditional banking.While NDEX provides a benchmark for large and liquid Indian equities, FINNDEX offers a sector-specific measure of financial companies.The indices could serve as reference points for investors, market participants and researchers seeking to assess the performance of the broader equity market and the financial sector.

Their longer-term role will depend on market adoption and how participants use them as benchmarks and potential building blocks for investment products.(You can now subscribe to our ETMarkets WhatsApp channel)