NSE Indices launched Nifty500 Momentum 50 index today. The Nifty500 Momentum 50 index is a new strategy index launched by NSE Indices Limited (a subsidiary of the NSE India). This index will tracks the performance of the top 50 companies within the Nifty 500 based on their normalized momentum score.
Nifty500 Momentum 50 index Important features:
- Normalized Momentum Score: Companies are selected based on their 6-month and 12-month price returns, adjusted for volatility. That means “The Normalized Momentum Score for each company is determined based on its 6-month and 12-month price return, adjusted for volatility”.
- Stock Weightage Criteria: Stock weights are determined by a combination of the normalized momentum score and its free-float market capitalization.
- Stock weights are based on a combination of the stock’s Normalized Momentum Score and its free float market capitalization. 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.
- Stock Weights Capping: Individual stock weights are capped to ensure diversification. By NSE Indices – “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”.
- Also the index is reconstituted and rebalanced semi-annually. With base value 1000 and base date for the index is April 01, 2005.
- It Can be tracked by Exchange Traded Funds (ETFs), index funds, and structured products.
- Nifty500 Momentum 50 index serves as a benchmark for asset managers and passive funds.
- Nifty500 Momentum 50 index is expected to provide investors with another tool for accessing the momentum factor in the Indian equity market.
Official Press Release Nifty500 Momentum 50 index launched by NSE
Source: NSE India