NSE to launch CPSE Index on March 18

CPSE ETF will give investors an opportunity of cost-efficient investment in blue-chip public sector companies across sectors

Premier stock exchange NSE will launch on March 18 the much-awaited CPSE Index in order to facilitate the government disinvest some of its stake in as many as 10 blue-chip public sector enterprises.

The 10 major CPSEs (Central Public Sector Enterprises) that will form part of the new index are: Coal India, GAIL (India), Oil & Natural Gas Corporation, Indian Oil Corporation, Bharat Electronics, Oil India, Power Finance Corporation, Rural Electrification Corporation, Container Corporation of India and Engineers India.

The government plans to disinvest stake in the 10 firms through a new fund offer for an exchange traded fund (ETF).

ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

"The Exchange proposes to incorporate CPSE Index on trading system for its online dissemination with effect from March 18, 2014," NSE said.

"The CPSE ETF based on the CPSE Index will give investors an opportunity of cost-efficient investment in blue-chip public sector companies across sectors," it added.

The base date for the CPSE index has been fixed as January 1, 2009, and it has a base value of 1,000.

"The 10 stock index provides representation to six sectors of the economy and the weightage of each stock in the index is capped at 25 per cent," NSE said.

"The weights of index constituents shall be re-aligned every quarter," it added.

According to NSE, the CPSEs under the index have more than 55 per cent government holding under promoter category, an average free-float market capitalisation of more than Rs 1,000 crore for six months ending June 2013.

All the companies part of the CPSE index are listed on the NSE. The index has been constructed by India Index Services & Products.

Exchange traded funds have grown tremendously in the last few years in India, and assets under management have gone up from Rs 1,396 crore in March 2009 to Rs 11,807 crore in September 2013.