NEW DELHI, India — NSE Indices has launched the Nifty India Defence Equal Weight Index, a new sector-focused benchmark tracking 19 companies from India’s defence industry. The index follows an equal-weight methodology, giving constituents broadly similar representation instead of allowing larger companies to dominate based on market capitalisation.
- 19 stocks: The new index tracks 19 defence-sector companies.
- 31.05% annualised return: The index has delivered this return since its April 2, 2018 base date.
- Equal-weight approach: Constituents receive broadly similar weights in the benchmark.
- Rebalancing: Stock weights will be reviewed and rebalanced quarterly, while index reconstitution will take place twice a year.
Nifty India Defence Equal Weight Index launched
The new benchmark has been introduced by NSE Indices, a subsidiary of the National Stock Exchange, to provide a dedicated way of tracking companies operating in India’s defence sector.
All 19 companies included in the new index are also constituents of the broader Nifty India Defence Index. The parent index selects eligible companies from the Nifty Total Market Index based on their involvement in defence-related industries or their generation of at least 10% of revenue from the defence sector.
How the equal-weight defence index works
The key difference between the new benchmark and a conventional market-capitalisation-weighted index is the way individual stocks are represented. Under the equal-weight methodology, smaller companies receive representation broadly comparable to larger companies in the basket.
This structure gives investors a different way to track the sector because the performance of the benchmark is not designed to be dominated by the largest constituents alone.
Nifty India Defence Equal Weight Index: Base date and value
The index has a base date of April 2, 2018 and a base value of 1,000. NSE Indices will reconstitute the index twice each year.
Its stock weights will also undergo quarterly review and rebalancing in March, June, September and December. This schedule is designed to keep the composition and individual weights aligned with the index methodology.
Top stocks in Nifty India Defence Equal Weight Index
| Company | Weight |
|---|---|
| Astra Microwave Products | 5.80% |
| Hindustan Aeronautics | 5.76% |
| Paras Defence and Space Technologies | 5.72% |
| Dynamatic Technologies | 5.60% |
| Solar Industries India | 5.56% |
The five companies listed above are among the leading constituents of the newly launched benchmark based on their current index weights.
Capital goods dominate the defence index
Capital goods companies account for the largest sectoral share of the Nifty India Defence Equal Weight Index, with a weight of 88.98%.
Chemicals represent 5.56% of the index, while automobile and auto components account for 5.46%. The sector distribution reflects the composition of companies included within the defence-focused benchmark.
Nifty India Defence Equal Weight Index returns
According to the index factsheet, the benchmark has delivered an annualised total return of 31.05% since its base date of April 2, 2018.
The index recorded annualised total returns of 32.71% over the one-year period and 55.09% over the five-year period, according to the supplied data.
Past performance, however, does not indicate or guarantee future returns. The index figures are historical performance data and can fluctuate as market conditions change.
How the new index can be used
NSE Indices said the benchmark can serve as a reference for passive investment products such as exchange-traded funds, index funds and structured products. It also provides asset managers with a dedicated benchmark for India’s defence sector.
The launch gives market participants another index-based framework for evaluating defence-sector stocks, while the equal-weight methodology provides an alternative to approaches where companies with larger market capitalisations have greater influence.
Frequently Asked Questions
What is the Nifty India Defence Equal Weight Index?
It is a sector-focused index launched by NSE Indices that tracks 19 companies associated with India’s defence sector using an equal-weight methodology.
How many stocks are in the Nifty India Defence Equal Weight Index?
The index consists of 19 stocks, all of which are also part of the broader Nifty India Defence Index.
What is the base date of the Nifty India Defence Equal Weight Index?
The index has a base date of April 2, 2018, with a base value of 1,000.
What has been the historical return of the defence equal-weight index?
The index has delivered an annualised total return of 31.05% since inception. Its annualised one-year and five-year total returns are 32.71% and 55.09%, respectively.
Which stock has the highest weight among the listed top constituents?
Among the top constituents provided in the index information, Astra Microwave Products has the highest weight at 5.80%, followed by Hindustan Aeronautics at 5.76%.
Financial disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security or financial product. Historical index returns do not guarantee future performance. Investors should conduct independent research and consult a qualified financial adviser before making investment decisions.
