India Index Services & Products Ltd (IISL), a step-down NSE subsidiary, today launched the NI15 Index that will track 15 large cap stocks from sectors of IT, consumer goods, pharmaceutical and automobile.
The index would enable investors to track and invest in promising stocks that are getting high valuation from the market, IISL said in a statement.
The 15 stocks included in NI15 are -- ITC, Infosys, Tata Consultancy Services, Mahindra & Mahindra, Sun Pharmaceutical Industries, Hindustan Unilever, HCL Technologies and Hero MotoCorp.
Besides, the index would track securities of Dr Reddy's Laboratories, Bajaj Auto, Asian Paints, Lupin, United Spirits, Cipla and Colgate Palmolive (India) Ltd.
According to IISL, the new index has consistently recorded higher returns than the market and has relatively low correlation with the NSE Nifty.
The index has given 18 per cent returns in one year and recorded 26 per cent CAGR (compound annual growth rate) over 5 years, which is higher than broad market returns, IISL said.
The NI15 is easily replicable and tradable and all the 15 stocks on the index have derivatives available on them.
Further, to ensure that no single security dominates the index, weights of constituents are capped where no constituent shall have more than 15 per cent weightage in the index.
The 15-stock index is ideal for passive index funds and ETFs, would facilitate an efficient hedging strategy for derivative trading, among others.
Currently the index will be disseminated at the end of the day basis and there could be products on it subject to regulatory approval, IISL added.
"Stocks from these selected sectors have been screened based on liquidity, free-float market capitalisation, earnings per share (EPS) and EPS growth frequency," IISL said.
"The stock rebalancing will be done semi-annually and the sectors can change once in two years," it added.
