The Bombay Stock Exchange (BSE) is be getting more and more innovative and investor-friendly by the day. The latest step that it has taken is to enable the tracking of the primary market conditions on bourses.
Considering the penchant of Indian investors to invest in anything that is new, that has made initial public offerings (IPOs) the rage that they are, the BSE has introduced an indicator, called the IPO index, which would track the value of newly-listed companies for a period of two years after listing.
The launch by the BSE of its IPO Index may have been well-time considering that the Indian economy, currently growing at 6.7 per cent as well as rising secondary markets, may well fuel an IPO binge in the near future.
The IPO index will have a ceiling (cap) on weights accorded to index constituents while market capitalization weightings of index constituents will be limited to 20 per cent.
If a constituent's market capitalization would result in a higher weighting, the company's weight will be suitably adjusted to ensure that no single company has a weight in excess of 20 per cent on the index. However, in the period between the rebalancing exercise, weightage of any index constituent can exceed 20 per cent.
There are already 48 stocks which are constituents of the BSE IPO Index as of now. The top three stocks as far as weight in index are Reliance Power with 18.40 per cent while Power Grid Corporation of India stands at second place with 16.68 per cent. Mundra Port and Special Economic Zone stands at number three with 10.39 per cent.
Summary of guidelines followed for BSE IPO index are as follows:
•
A company seeking listing on the Exchange after completion of IPO shall be considered eligible for inclusion in the index. Follow-on public issues shall not be considered for inclusion in the index.
• A scrip must have the minimum free-float market capitalisation of Rs. 100 crores on its first day of listing
• A scrip will be included in the index on the third day of its listing (T+2) subject to fulfillment of the minimum free-float market capitalisation criteria stated above.
• A scrip will be excluded from the index on the second Monday of the month after completion of two years of listing.
• At all time a minimum of 10 scrips shall be maintained in the index. In case, there are less than 10 companies on account of possible exclusion after two years, the exclusion of such company shall be delayed till such time new inclusion is made in the index.
• The maximum weight of any scrip shall be capped at 20%. The constituent weightage shall be reviewed at the time of inclusion/ exclusion of a scrip and on monthly rebalancing. However, between any rebalancing, weightage of any index constituent can exceed 20%
• Base date of the index is May 3, 2004; while base index value is set to 1000 points. Index value on August 21, 2009 is 1901.67.
• The index would be calculated and disseminated on a real-time basis through BOLT effective August 24, 2009 and shall also be available on our website.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
