Nifty PSE

NIFTY PSE is a thematic index on the NSE that monitors the real-time performance of India's public sector enterprises. It provides insights into market trends and the overall growth of these government-owned companies. By tracking their movements, the index serves as a key indicator of the sector’s financial health and investment potential.

NIFTY PSE is a thematic index on the National Stock Exchange (NSE) that tracks the performance of Indian public sector enterprises in real time. It comprises 20 stocks where the central and/or state government holds at least 51% share capital, either directly or indirectly. These stocks span seven sectors: Oil, Gas & Consumable Fuels (42%), Power (30.71%), Capital Goods (10.03%), Metals & Mining (5.88%), Financial Services (4.88%), Services (3.37%), and Consumer Services (3.14%).

Launched on January 2, 1995, with a base value of 1000, the NIFTY PSE index has surpassed 3,000 levels at ~5x P/E multiples. It is reconstituted semi-annually to reflect evolving market dynamics. Managed by NSE Indices Limited, the index follows a three-tier governance structure:

• Board of Directors of NSE Indices – Oversees management as per the framework.

• Index Advisory Committee (Equity) – Provides guidance on macro-level issues.

• Index Maintenance Sub-Committee – Maintains methodology and stock selection.

A variant, the NIFTY PSE Total Returns Index, is used for benchmarking fund portfolios and launching index funds or ETFs

The NIFTY PSE share price is calculated by weighting its 20 stocks based on periodically capped free-float market capitalisation, relative to a base market capitalisation, on a real-time basis.

A security must meet the following criteria for inclusion:

• Listed on the National Stock Exchange (NSE).

• Part of the NIFTY 500 index.

• At least 51% ownership by the central and/or state government.

• If eligible stocks fall below 10, additional stocks are selected from the top 800 ranked stocks based on average daily turnover and market capitalisation over the past six months.

• Belong to the PSE sector.

• Have a float-adjusted market capitalisation of at least 1.5 times the index’s smallest constituent.

• Maintain a trading frequency of at least 90% in the past six months.

• Have a listing history of at least six months.

• Recently listed IPOs can qualify if they meet the above criteria for three months instead of six.

Adhere to a cap of 33% for a single stock and 62% for the top three stocks combined during rebalancing.

The NIFTY PSE index value is calculated using:

Index Value = Current Index Market Capitalisation / (Base Free Float Market Capitalisation * Base Index Value)

Where:
Current Index Market Capitalisation = Shares outstanding * IWF * Capping factor * Price
IWF (Investible Weight Factors) = 1 (market capitalisation-based method)

The index is rebalanced semi-annually using six months of data, with cutoff dates on 31st January and 31st July. Stock replacements, if any, take effect on the last trading day of March and September, with four weeks' prior notice.

Investing in NIFTY PSE offers exposure to leading public sector enterprises with strong government backing, ensuring stability. It provides diversification across key sectors like energy, finance, and infrastructure. The index is transparent, rebalanced semi-annually, and follows a capping mechanism to limit concentration risk. Additionally, NIFTY PSE stocks often offer attractive dividends, making it a viable option for long-term investors seeking steady growth and income through ETFs and index funds.

The NIFTY PSE index was launched on 2nd January 1995 with a base value of 1000 to track the performance of Indian public sector enterprises. It comprises 20 government-owned companies across multiple sectors. Over the years, the index has grown, surpassing 3,000 levels at ~5x P/E multiples. Managed by NSE Indices Limited, it is rebalanced semi-annually to reflect market dynamics. The index has become a key benchmark for investors tracking public sector enterprises in India.

NIFTY PSE tracks the performance of 20 public sector enterprises listed on the NSE, where the central or state government holds at least 51% ownership. The index is weighted by free-float market capitalisation, ensuring accurate market representation. It is rebalanced semi-annually using six months of data, with changes taking effect in March and September. The index follows a capping mechanism to prevent stock concentration and is widely used for benchmarking, ETFs, and index-based investments.