BSE Healthcare

About S&P BSE Healthcare Index

The BSE Healthcare index launched on 25th February 2022, reflects the performance of the healthcare sector in the Indian economy. The broad-based index consists of 97 stocks from the S&P BSE AllCap index, which captures the key areas from the Healthcare sector such as Health Care Services & Pharmaceuticals & Biotechnology.

Since its inception, the S&P BSE Healthcare index has scaled beyond 22,000 and is currently at a price-to-earnings ratio of 35.39x. The computation is in line with the free-float market capitalization method.  

This index is operated by the S&P BSE Index Committee, a joint committee of S&P and BSE Ltd. The BSE Healthcare index in INR and USD denominations is calculated, using Refinitiv spot exchange rates. Another variant of the index, the S&P BSE Healthcare TR, is also calculated.

Criteria to Select Stocks for Inclusion in BSE Healthcare

To be eligible for inclusion these securities should meet the following criteria: 

• Domestic Company and Listing: The security must be based in India and listed on the Bombay Stock Exchange (BSE).
• Index Inclusion: It should be part of the S&P BSE AllCap Index above.
• Principal Sector Classification: It shall represent the Healthcare sector as defined by the BSE Sector Classification System.
• Share Classes: The inclusion of all share classes of the company that are eligible. 
• Impact Cost: It shall be less than or equal to 0.5% for the last six months. 
• Trading and Listing History: The frequency of trading of the security is above 80% along with at least six months of listing history. 
• Turnover Ratio: The minimum Turnover ratio should be 5% or higher.
• IPO and Restructuring: Companies that have IPO recently or undergone significant restructuring need to have been listed for at least a month to be qualified.
• Exclusions: Securities would be excluded between rebalancing dates because of events relating to mergers, delisting, takeover, suspensions, or bankrupt liquidation.
• Market Capitalization: If the three-month average daily total market capitalization of a stock falls below INR 0.5 billion by the reference date on the last trading day in January, the stock shall be excluded from the index.

Calculation of BSE Healthcare Index

The BSE Healthcare index share price is calculated by weighting its 97 constituent stocks according to their free-float capped market capitalization, using the divisor methodology employed by S&P Dow Jones equity indices. In this method, individual stocks are limited to a maximum weight of 33%, with any excess weight redistributed among the remaining stocks in the index. 

The Formula for Calculation of Index Value: 

Index Value = Index Market Value / Divisor 

Where, 

Index Market Value is calculated as Price × Shares × IWF (Float Factor) × Fx rate × AWFi

AWFi stands for Adjusted Stock Market Value factor assigned on the rebalancing date. 

Divisor is the Index Market Value after rebalancing divided by the Index Value before rebalancing. 

The reconstitution of the BSE Healthcare index would take place once a year at the close of September, with quarterly reviews at the end of December, March, and June to adjust index cap weightings. Stocks are capped individually at 33%, while the combined weight of the top three stocks is capped at 63%. The ranking follows consistently as their final weight or free-float market capitalization.