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Tuesday, March 5, 2024

NIFTY NSE Emerge SME Index

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Exchanges have their own Index, like NSE Emerge SME Index. The Initial Public Offering of small and medium-sized businesses (SME IPO) is bringing about a paradigm change in the Indian financial markets. Businesses that keep sales, assets or a number of workers below a specific level are known as small and mid-sized companies (SMEs). SMEs get listed on an exchange like NSE emerge.

What is the NSE Emerge SME Index?

The NIFTY SME EMERGE Index was created to represent the performance of a portfolio of qualified small and medium-sized businesses that are listed on the NSE EMERGE platform. The stocks included in the index are calculated as part of a weighted average based on their free float market capitalization. The NSE Emerge SME Index is handled by the Nifty Indices group, which creates and handles all Nifty index portfolios, including the famous Nifty 50 (which represents the average of the current biggest companies in the Indian Stock Market). Similarly, the NIFTY SME EMERGE Index is constituted of the stocks of the most promising SMEs present in the Indian market.

Characteristics of the NSE Emerge SME Index

The NIFTY NSE EMERGE SME Index was introduced on 1st December 2016, with a base value of 1000 points.

The Index is reassessed and overhauled every quarter, with its constituent companies being assessed on their free-floating market capitalization.

The Index is not a representation of every SME available to trade in on the SME platform but is rather a representation of the most promising and liquid SMEs in the Indian stock market.  

The following eligibility requirements must be met by the stocks in order for them to be included in the NIFTY SME Index:

Only stocks listed under the NSE EMERGE platform are eligible to be considered for the Nifty NSE Emerge SME Index.

There must be at least 20 components in the index. In case there aren’t 20 stocks meeting the eligibility requirements, a minimum of 20 is created by decreasing the minimum trading frequency requirement by 25% by 1% at a time.

Stocks present on the Index must have traded for at least 10% of the trading days during the preceding three months, subject to a minimum of 25% of trading days, at the time of the Index quarterly review.

The weighted average of the constituents is determined by their calculated free-float market capitalization.

The Index is determined at the conclusion of each trading day and is carried out on every day that the National Stock Exchange of India is open for equity share trading.

Regarding the quarterly reconstitutions:

The Index is reconstituted four times a year, out of which two of the reconstitutions count as part of the semi-annual reviews of

The NIFTY broad market Indices, which take place on every working day immediately succeeding the last Thursdays of March and September. The other two are held on the immediate working days post the last Thursdays of June and December.

In addition to the scheduled quarterly reviews, ad hoc reconstruction of the index must be carried out if any index components are suspended, delisted, or transferred to the NSE Mainboard.

If an index constituent’s trade frequency, as determined by the aforementioned approach, is less than 10%, that index constituent is eliminated during the reconstitution.

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