BSE Arm Has Launched Three New Indices

BSE Ltd.’s stock saw a huge five-day winning streak, culminating in a lifetime high today, as its subsidiary, Asia Index Pvt. Ltd., unveiled three new indices: BSE Sensex Sixty 65:35, BSE Sensex Sixty, and BSE Power and Energy. Despite reaching this stage, the stock experienced a drop later in the day, ending the rally by dropping around 6% in one day.

New Indices by BSE’s Subsidiary

The newly launched indices are aimed at broadening investment strategies and introducing fresh opportunities. Specifically, they can be used for the benchmarking of Portfolio Management Services (PMS) strategies, Mutual Fund (MF) schemes, and other fund portfolios. They also cater to passive strategies such as Exchange-Traded Funds (ETFs) and Index Funds, while serving as a gauge for companies’ performances in their respective sectors.

1. BSE Sensex Sixty 65:35
   The BSE Sensex Sixty 65:35 is a strategy index comprising 60 stocks, representing the BSE Sensex and BSE Sensex Next 30 constituents in a ratio of 65:35. This ratio provides higher exposure to the Next 30 compared to a traditional free-float market capitalization approach. Together, these 60 stocks represent over 55% of India’s total free-float market capitalization.
2. BSE Sensex Sixty
   The BSE Sensex Sixty includes constituents from both the BSE Sensex and the Next 30, arranged by free-float market capitalization. With a base value of 10,000 and a first value date of June 23, 2014, it undergoes semi-annual reconstitution and quarterly rebalancing. It also features a USD variant.
3. BSE Power and Energy
   BSE Power and Energy thematic index focuses on energy and utility companies within the BSE 500. Its base value is set at 1,000, with the initial date being December 31, 2013. Rebalanced quarterly, the index caps the weight of any stock at 15%. It also includes a USD variant.

Impact & Analyst Outlook

On the back of this news, shares of BSE Ltd. surged 3.7% to an all-time high of Rs.4,260 per share before dropping around 6% to Rs.3,863. As of morning., the stock traded 3% lower at Rs.3,983.50, while the Nifty 50 dipped by 0.4%. Year-to-date, BSE shares have gained 75.3%, with a 179.8% increase over the past 12 months. Of the seven analysts covering the stock, four have a ‘buy’ rating, two recommend ‘hold,’ and one suggests ‘sell,’ pointing to an average 12-month downside of 22.4%.

Conclusion: All in all, the launch of these three indices reflects BSE’s intent to expand investment avenues, offering more strategic and diversified products for the Indian market. Despite the volatility in its stock price, the development is a step towards strengthening investment frameworks, both domestically and internationally.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.