The NSE said it will start disseminating live the value of its NV20 index on its terminal from June 22.

Currently, the index value is made available only once at the end of the day. Beginning next week, live real-time value will be available in NSE’s Futures & Options segment on its trading terminal. This is a pre-cursor to the new NV20-based ETF being listed on the stock exchange.

In a press statement, the NSE said, “The Index NV20 is designed to reflect the behaviour and performance of a diversified portfolio of value companies forming part of the CNX Nifty Index. It consists of the 20 most liquid value blue chip companies listed on NSE.”

Varied purposes

The NV20 Index provides exposure to eight broad sectors of the economy. Apart from forming an ETF, the index can be used for a variety of other purposes, such as benchmarking fund portfolios, issuance of index funds and structured products.

Infosys, ICICI Bank and Reliance Industries are the top three weighted companies in the index.

“Stocks are selected on the basis of value parameters, such as return on capital employed, price to earnings ratio, price to book value ratio and dividend yield. Since the base of the index is CNX Nifty, which is the benchmark index of India, only large and liquid value companies form part of NV20 Index,” said Mukesh Agarwal, CEO, India Index Services and Products ((IISL).

IISL, a subsidiary of the NSE, creates the exchange’s indices and provides index-related services.

For NV20, the ‘beta’ — a term that measures the volatility or systematic risk of a product — is less than one for periods over one year.

Using historical calculations of the performance of the NV20 Index, IISL found that it delivered around 15 per cent return in the last five years and about 20 per cent return in the last three years.

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