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Monday, March 4, 2024

Comprehensive S&P BSE SME IPO Index

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The BSE SME IPO Index is build to track the performance of small, medium that are liSted on BSE. 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 several workers below a specific level are known as small and mid-sized companies (SMEs). SMEs get listed on an exchange like the BSE SME Platform. Exchanges have their indices, like S&P BSE SME IPO Index.

What is the S&P BSE SME IPO Index?

The S&P created the S&P BSE SME IPO index to track the progress of small and medium-sized businesses (SMEs) listed on the BSE SME platform after their initial public offering. The S&P BSE SME IPO index only measures the performance of SMEs listed via IPO. The stocks in the Index are calculated as a weighted average of their free-float market capitalization. The S&P BSE SME IPO is handled by the S&P group, which creates and manages all BSE index portfolios, including the famous S&P BSE SENSEX Index (which represents the average of the current biggest 30 companies in the Indian Stock Market).

Characteristics of the S&P BSE SME IPO Index

The S&P BSE SME IPO Index was introduced on Dec 14, 2012, with a base value of 100 points. The Index is reassessed and rebuilt every month, with its constituent companies assessed on their free-floating market capitalization.

The Index represents every SME who floats their IPO on the SME platform. The most promising SMEs on the Indian stock market is represented by it. 

The stocks must meet the following eligibility requirements for them to be included in the S&P BSE SME IPO Index:

Only stocks listed under the S&P BSE SME platform are eligible to be considered for the S&P BSE SME IPO Index. On the second day following their listing, IPO companies listed on the BSE SME platform are included in the Index. The Index excludes companies listed for a whole year following their IPO. 

There must be at least 10 companies in the Index. In case there aren’t ten stocks meeting the eligibility requirements, the exclusion is delayed until a new company is included in the Index. Their calculated free-float market capitalization determines the weighted average of the constituents.

The Index is determined after each trading day and is carried out every day that the Bombay Stock Exchange is open for equity share trading.

Regarding the Index Construction:

The Index is rebalanced every month. At each rebalancing, the companies of eligibility are selected and form the Index. After one year of being listed on the BSE SME Platform, a firm is removed from the Index at the start of the Monday after the third Friday of the month. Even if the migration takes place before the firm has been listed for a whole year, a company that switches from the BSE SME Platform to the BSE Mainboard Platform is dropped from the Index on the effective date of the switch.

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