National Stock Exchange Indices Ltd., NSE's index services subsidiary, has launched a new broad market index called Nifty Smallcap 500. The index aims to track the performance of top 500 small cap stocks selected based on six-month average full market capitalisation after the Nifty Midcap 150 index, the company said in a statement on Friday.
Further, the free float market capitalisation or FFMC of a stock will be used to determine the weight of each stock. FFMC measures a company's market value using only the shares actively available for public trading, and is calculated by multiplying the current market price per share with the number of freely traded shares.
According to the statement, the base date for the index is April 1, 2005, and the base value is 1000. The index will be reconstituted on a semi-annual basis in March and September.
It added that the Nifty Smallcap 500 index is expected to act as a benchmark for asset managers. The new index will also be a reference index tracked by passive funds in the form of Exchange Traded Funds or ETFs, index funds and structured products.
NSE Indices provides a variety of indices and index related services for the capital markets. The company focuses on the index as a core product. The company owns and is responsible for managing a portfolio of indices under the Nifty brand of NSE, including the flagship index, the Nifty 50. It already has three smallcap indices — Nifty Smallcap 250, Nifty Smallcap 50 and Nifty Smallcap 100.
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