NSE Indices launches Nifty MidSmallcap400 Momentum Quality 100 index

NSE Indices has introduced the Nifty MidSmallcap400 Momentum Quality 100 index, which aims to monitor the performance of midcap and smallcap stocks selected based on momentum and quality factors from the Nifty MidSmallcap 400 index.

The index includes 50 stocks from the Midcap universe and 50 stocks from the Smallcap universe, with momentum and quality scores determined based on specific criteria.

The momentum score for each company is calculated using its 6-month and 12-month price return adjusted for volatility, while the quality score is determined based on return on equity (ROE), financial leverage (Debt/Equity Ratio), and earnings (EPS) growth variability over the past 5 years. The weight of each stock in the index depends on the combined momentum-quality score and its free-float market capitalization, with stock weights capped at 5% during index rebalancing.

 

The index's base date is 1 April 2005, with a base value of 1000, and it will be reconstituted and rebalanced semi-annually.

The new index is anticipated to serve as a benchmark for asset managers and be tracked by passive funds such as ETFs and index funds.

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