NSE Indices launches Nifty 1000, Nifty 1000 Equal Weight indices; Key details

NSE Indices Ltd, the index services subsidiary of the National Stock Exchange (NSE), has launched two new equity indices Nifty 1000 and Nifty 1000 Equal Weight to provide broader coverage of the Indian stock market. The newly introduced indices will cover 1,000 stocks, making them the broadest indices in the Nifty equity index universe, according to an exchange press release issued on Thursday, November 12.

The new indices are designed to serve as benchmarks for asset managers and reference indices for passive investment products, including exchange-traded funds (ETFs), index funds and structured products. By expanding the number of constituents to 1,000, the indices will cover a wider portion of India's investable equity universe, extending their reach beyond the Nifty Total Market index.

Nifty 1000: How will the new index work?

The Nifty 1000 index will track the performance of 1,000 stocks selected on the basis of their full market capitalisation from the eligible universe. However, the weight assigned to each constituent will be determined by its free-float market capitalisation.

The selection framework will place emphasis on liquidity and investability, with factors such as trading frequency and impact cost taken into consideration. These parameters are intended to ensure that the index represents a broader section of the equity market while also accounting for the practical requirements of replicating the index in investment portfolios.

The Nifty 1000 will undergo a semi-annual review in March and September. This review process will determine the constituents in accordance with the index's selection framework.

Nifty 1000 Equal Weight: What is different?

The Nifty 1000 Equal Weight index will comprise the same 1,000 stocks as the Nifty 1000. However, unlike the market-cap-based weighting approach of the parent index, each constituent in the Equal Weight version will receive an identical weight.

The weights will be reset during quarterly rebalancing in March, June, September and December. This means that each stock will have an equal representation in the index at every scheduled rebalancing, irrespective of its market capitalisation.

While both indices will track the same set of companies, their different weighting methodologies will result in distinct ways of representing market performance. The Nifty 1000 reflects the relative free-float market capitalisation of its constituents, whereas the Equal Weight version gives each stock the same weight.

Both the Nifty 1000 and Nifty 1000 Equal Weight indices have a common base date of September 24, 2007, and a base value of 1,000.