NSE Indices, a subsidiary of the National Stock Exchange of India (NSE), launched a new index aimed at investors seeking value stocks. The Nifty200 Value 30 Index tracks the performance of 30 companies selected from the broader Nifty 200 index based on their value characteristics.
The Nifty200 Value 30 uses a combination of metrics to identify undervalued companies, including earnings per share (E/P), book value per share (B/P), sales per share (S/P), and dividend yield. This approach focuses on companies with strong fundamentals that may be trading at a discount compared to their true worth.
The weight of each company in the Nifty200 Value 30 Index is determined by a combination of its value score and its free-float market capitalization. This weighting methodology helps to diversify the index and prevent any single stock from having an outsized influence. Additionally, stock weights are capped at the lower of 5% or 5 times the weight of the stock in the index based only on free float market capitalization.
The Nifty200 Value 30 Index is expected to serve as a valuable benchmark for asset managers and passive investment products like Exchange Traded Funds (ETFs), index funds, and structured products. The index boasts strong historical performance with a total return (YTD) of 26.43% as of 12 June 2024. It has surged 93.41% in one year and clocked a CAGR of 28.59% in five years.
The Nifty200 Value 30 Index was launched on June 12, 2024. The index has a base date of 1 April 2005 and a base value of 1000. It will be rebalanced semi-annually and currently consists of 30 companies.
This new index provides investors with a targeted tool to invest in potentially undervalued companies within the largecap space.