MCX Stock Exchange (MCX-SX) on Wednesday announced the launch of SXBANK, a new index to capture the performance of the banking sector.
SXBANK consists of the 10 most liquid and largest capitalised banking stocks. The index, which is based on Industry Classification Benchmark (ICB) from FTSE, is computed using capped free float market capitalisation method, MCX-SX said in a statement in Mumbai.
SXBANK is a scientific, transparent and completely rule-based index, offering better reflection of the banking sector with superior risk-adjusted returns.
The constituents of the index represent more than 80 per cent of the total market capitalisation of all bank stocks. It is computed with a base date of March 31, 2010, indexed to a base value of 5000.
The weight of individual stocks in the index has been capped at 15 per cent to minimise concentration and thereby provide a cost-effective support for portfolio management and structured products such as index futures and options, index portfolio, exchange traded funds and index funds.
The MCX-SX Index Advisory Committee, comprising of academicians, industry experts and fund managers, periodically evaluates and examines the index rules to ensure its scientific nature and transparency on a continuous basis.
"With the banking sector poised for further growth with structural reforms, new entrants and technology advancements, the banking stocks will further get into the limelight. The exchange is committed to develop products that meet the requirements of the market participants," MCX-SX chairman Thomas Mathew T said.
"SXBANK is uniquely positioned as it caps the weight of the individual stocks at 15 per cent, the first for an index representing the banking sector in India," MCX-SX managing director and chief executive Saurabh Sarkar said.
The index provides superior returns and risk-adjusted returns, as compared to other banking indices over a four-year period, he said.
The newly appointed MCX-SX board has been announcing measures to develop various market segments, generate healthy volumes and attract larger participation on the exchange. The index will be launched with effect from April 10.
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