NSE's IISL launches Nifty 200 Quality 30 index

Leading stock exchange NSE's arm IISL today launched Nifty 200 Quality 30 index, which will track the performance of select firms based on profitability and earnings growth variability.

The new index includes top 30 companies from its parent Nifty 200 index, selected on the basis of their quality' scores, India Index Services & Products Limited (IISL) said in a statement.

The quality score for each company will be determined based on return on equity, financial leverage (debt-equity ratio) and earning growth variability analysed during the previous five years.

The weight of each stock in the index will be based on a combination of stock's quality score and its free float market capitalisation.

"In India, with availability of various smart beta indices, ETFs based on them are also expected to pick up. The launch of Nifty 200 Quality 30, along with the existing suite of Nifty smart beta indices reinforces NSE's commitment towards developing the passive fund management space," IISL CEO Mukesh Agarwal said.

The base date for the index is April 1, 2005 and base value has been set at 1,000. The index composition is reconstituted on a semi-annual basis.

The index is expected to act as a benchmark for asset managers looking for a reliable metric that measure risk-return dynamics of quality factor based portfolio. It is also expected to be reference index which can be tracked by passive funds in the form of Exchange Traded Funds (ETFs), index funds and structured products.