Asia Index Launches S&P BSE Sensex Next 50 Index

Less than two months after launching the S&P BSE Sensex 50 index, Asia Index Pvt., a joint venture between S&P Dow Jones Indices LLC and BSE Ltd., launched the S&P BSE Sensex Next 50 index on Monday, with an aim to give investors a wider variety of “liquid” and “investable” stocks.

“The S&P BSE Sensex Next 50 Index is a transparent, rules-based and objective index that is designed to measure the performance of next 50 largest and liquid stocks after the constituents of S&P BSE Sensex 50 index,” Mahavir Kaswa, senior product manager, Asia Index, told BloombergQuint over the phone.

In January, the BSE had set up the India International Exchange (INDIA INX) at Gujarat International Finance-Tec City in Gandhinagar, as it aimed to reclaim some lost market share to equity-futures in Singapore, currency derivatives in Dubai and structured products in Hong Kong. The new index will be the next offering from BSE after Sensex 50 index, which went live on January 16.

Sensex Next 50: The Methodology

The index comprises of common stocks or differential voting rights shares (DVRs) that are members of the S&P BSE LargeMidCap, a sub-index of the S&P BSE AllCap. “The companies have been identified from pool of the top 100 companies identified based on the float adjusted market capitalisation after liquidity filters and 20 percent buffer on either side,” Kaswa said.

The key criteria for stock selection, Kaswa said, was liquidity. “We have been very careful in terms of liquidity because we understand the market requires an investable set of stocks. We employed a stringent liquidity test for this index as well,” he said.

Sensex Next 50: The Constituents

The S&P BSE Sensex Next 50 is a diversified index, with presence in every key economic sector as identified by BSE sector classification model, Kaswa said.

“Just to give you a perspective: the largest sector in terms of weightage at present in the index is basic materials, which constitutes nearly 24 percent weight. The second-largest is finance and then FMCG (fast-moving consumer goods),” he said.

The index will be periodically rebalanced on semi-annual basis, i.e., in June and December.

“With the recent launch of S&P BSE Sensex 50 and S&P BSE Sensex Next 50, we are confident that this new index will also start generating revenue for Asia Index,” Kaswa said.

BSE reported a 17 percent decline in consolidated net profit at Rs 63.73 crore in the October-December quarter of the current financial year.