NCDEX launches NDEX and FINNDEX indices to foray into equity and derivatives markets

NCDEX expands its market infrastructure offerings with two new indices.

Both indices use a multi-factor methodology to select stocks and determine their weights. The framework assigns scores based on four parameters: free-float market capitalisation (30%), average daily traded value (30%), beta (20%) and volatility (20%). The methodology combines measures of company size, trading activity and sensitivity to market movements.

The final weight of each constituent is calculated by assigning equal importance to its free-float market-capitalisation weight and composite-score weight. Individual stock weights in both indices are capped at 15% at each rebalancing.

NDEX comprises 20 large and liquid Indian equities selected from the top 60 NSE-listed companies. It is designed to track the performance of leading listed companies. FINNDEX comprises 15 financial sector stocks, excluding insurance companies, selected from the top 40 eligible companies.

The constituent selection process for both indices uses the composite scoring framework to assess free-float market capitalisation, liquidity, beta and volatility. The NCDEX indices are calculated and maintained by NSE Indices Ltd.

NDEX and FINNDEX will be reviewed and rebalanced twice a year, in March and September. Provisions have also been made for ad-hoc reconstitution in specified circumstances. Both indices have January 2010 as base month and a base value of 10,000.

Index values will be calculated and disseminated in real time during market hours through NCDEX’s data feeds, website and periodic factsheets. NDEX tracks the performance of large and liquid Indian equities, while FINNDEX measures the performance of the financial sector.

Commenting on the launch, Vikas Goel, MD and CEO of NCDEX, said the introduction of NDEX and FINNDEX marked a milestone in the exchange’s transition into a multi-segment exchange.

He said the expansion into equity and equity derivatives was part of NCDEX’s plan to build a broader market institution in response to the changing needs of India’s financial ecosystem.

Goel added that as Indian capital markets deepen and attract greater domestic and international participation, transparent and well-designed benchmarks become increasingly important. He said the indices aim to support informed investment decisions, expand the tools available to market participants and reinforce India’s position as a destination for global capital.

Tojo Banerjee, Chief of Equity Business at NCDEX, said NDEX and FINNDEX use an approach to index construction that goes beyond market capitalisation, taking into account factors that influence stock selection and market behaviour.

He said FINNDEX reflects the diversity of India’s financial ecosystem, including capital markets, non-banking financial companies (NBFCs) and fintech, alongside traditional banking. NDEX, meanwhile, serves as a benchmark for large and liquid Indian equities.

Banerjee said the indices could serve as reference points for investors, market participants and researchers assessing India’s evolving growth story.