NSE Indices Limited, a subsidiary of the National Stock Exchange (NSE), has introduced a new strategy index called the Nifty500 Multicap Momentum Quality 50. This index is designed to track the performance of 50 stocks from the large, mid, and small-cap segments, which are selected from the Nifty 500 based on momentum and quality factors.
The index comprises 10 large-cap stocks from the Nifty 100, 15 mid-cap stocks from the Nifty Midcap 150, and 25 small-cap stocks from the Nifty Smallcap 250. Selection criteria include a momentum score derived from 6- and 12-month price returns, adjusted for volatility, and a quality score based on return on equity (ROE), debt-to-equity ratio, and earnings growth variability over the past five years. The weight of each stock is determined by a combination of its momentum-quality score and free-float market capitalization, with a maximum stock weight capped at 5%.
Launched with a base value of 1000 as of April 1, 2005, the index will be rebalanced semi-annually. It is expected to serve as a benchmark for asset managers and be tracked by passive investment products like ETFs and index funds.
For more details, check the official press release here.