About S&P BSE Private Banks Index
The S&P BSE Private Banks Index is a thematic index that tracks the performance of Indian private banks that are listed. It is composed of twelve common stocks that are categorized as banks by the BSE's Sector Classification Model and are part of the S&P BSE Finance/Financial Services index. The company's stocks that are categorized as PSUs will not be included in this.
History of S&P BSE Private Banks Index
Launched on August 27, 2018, the BSE Private Banks Index has a base value of 1000 and a first value date of September 16, 2005. The NSE Private Bank Index share price has surpassed 13,000 at around 18.86x P/E multiples since its launch. The S&P BSE Private Banks Index has a weighted average carbon intensity of 29.49.
Management of S&P BSE Private Banks Index
Asia Index Private Ltd., a joint venture between S&P and BSE Ltd., administers the S&P BSE Private Banks Index. The S&P BSE Index Committee is in charge of overseeing and managing this index.
Eligibility Criteria for Inclusion in S&P BSE Private Banks Index
For the securities to be listed in the S&P BSE Private Banks Index, they must meet the following eligibility requirements:
- The company should be domiciled in India and listed on the Bombay Stock Exchange.
- It should form a part of the S&P BSE Finance index.
- It should form a part of the Private Banks Index sector as per the BSE Sector Classification System.
- The S&P BSE Private Banks Index is limited to common stocks; depository receipts (DVRs) are not permitted.
- At the time of index rebalancing, the company should have an annualized trade value of at least INR 500 million/400 million and a turnover ratio of at least 10%/8% for newly eligible stocks/current stocks, respectively.
- It should not have had more than 5 non-trading days in the past 6-month period.
- The top 10 equities are required to be included, ordered by average 6-month daily free float market cap. Based on the highest rank, the remaining 2 stocks are chosen from stocks ranked 11–14.
- Businesses that have changed their sector classification will not be counted towards the quarterly rebalancing dates.
- Even in the interim between semi-annual reconstitutions, companies that have experienced mergers, acquisitions, delisting, suspensions, GSM, etc., are eliminated.
How is S&P BSE Private Banks Index Calculated?
The index value is calculated as follows –
Index value = Index Market Value / Divisor
Where,
Index Market Value = Price * Shares * IWF (Float Factor) * Fx Rate
Divisor = Index Market Value after rebalancing / Index Value before rebalancing
Using the S&P Dow Jones equity indices' divisor technique, the 12 stocks in the S&P BSE Private Banks Index are weighted according to float-adjusted market capitalization to determine the share price. The weight of the individual equities is limited to 33 %, and the combined weight of the top three index components is not anticipated to surpass 65 %. Excess weight is allocated proportionately among all uncapped stocks in the event of a cap violation.
Semi-annually, in March and September, the S&P BSE Private Banks Index is reconfigured, with the third Friday of February and August serving as the reference date for closing. Every quarter, in March, June, September, and December, the index weights are rebalanced. In addition, a quarterly review of the index regulations is conducted to ensure they align with SEBI standards.
How to Invest in the BSE Private Banks Index?
Investing directly in the BSE Private Banks Index is not possible. Using a trading account, you can decide to invest in specific stocks in the same ratio as their index weighting. If not, watch out for thematic funds that invest in this index.
