BSE 250 SmallCap

The BSE 250 SmallCap Index monitors the performance of 250 BSE 500 small-cap firms that aren't included in the BSE 150 Midcap or BSE 100 Largecap. The index was introduced on November 30, 2017, with a base value of 1,000 and a base date of September 16, 2005.  

The index's goal is to depict the BSE 500's small-cap segment's performance. Its emphasis on businesses outside of the large-cap and mid-cap sectors is its defining feature. The index is made up of 250 companies, although the inclusion of differential voting rights shares may result in more than 250 stocks while the company count remains fixed at 250. 

The index uses a free-float market capitalisation methodology. This means constituent weights are based on the market value of shares available for public trading rather than the company's entire shareholding. This approach gives greater weight to companies with a higher free-float market capitalisation. 

Companies considered for the index are selected from the BSE 500 and must meet the applicable eligibility requirements. Key criteria include: 

• The company must be part of the BSE 500. 
• It must not be a constituent of the BSE 100 Largecap TMC or BSE 150 Midcap. 
• Eligible securities must meet the applicable BSE index eligibility requirements. 
• Differential voting rights shares may be included subject to the prescribed conditions. 
• The index maintains a fixed count of 250 companies, although the number of stocks may vary because of eligible DVR shares. 

The float-adjusted market capitalisation of its components is used for the calculation of the BSE 250 SmallCap. Each company's free-float market capitalisation takes into account the price of its shares, the number of outstanding shares, and the percentage of shares that are open for public trade. 

The general index calculation formula is: 

Index Value = (Σ Free-Float Market Capitalisation of Constituents ÷ Index Divisor) × Base Value 

The divisor is adjusted for corporate actions and other changes so that such changes do not create an artificial movement in the index. The index therefore reflects changes in constituent prices and their float-adjusted market capitalisation. 

Investing through products that track the index may provide the following benefits: 

• Small-Cap Exposure: It provides exposure to companies outside the large-cap and mid-cap segments. 
• Diversification: The index covers 250 companies across different parts of the market. 
• Broader Market Participation: Investors can gain exposure to a wider group of listed companies through an index-linked product. 
• Market Representation: The index provides a benchmark for tracking the performance of its selected small-cap segment. 
• Float-Adjusted Weighting: Companies are weighted according to their float-adjusted market capitalisation. 

An index cannot be purchased directly. Investors need to use an investment product that tracks the index, where available. 

Step 1: Choose an Index-Linked Product 

Look for a mutual fund, ETF, or other suitable product that tracks the BSE 250 SmallCap. 

Step 2: Review the Product Details 

Check out the investment approach, costs, tracking difference, liquidity, and other relevant information before investing. 

Step 3: Invest Through a Suitable Platform 

Complete the required account and transaction process through a broker, investment platform, or other authorised channel. 

Investors can compare available index-linked products and review their features before making an investment decision. 

The BSE 250 SmallCap Index follows 250 small-cap firms from the BSE 500 that are not included in the BSE 150 MidCap or BSE 100 LargeCap TMC. 

It uses a float-adjusted market capitalisation methodology. Each constituent's weight depends on its float-adjusted market capitalisation relative to the other index constituents. 

The index cannot be purchased directly. Investors may want to consider mutual funds or exchange-traded funds (ETFs) or other index tracking products that are available. 

The smaller companies may be more susceptible to price swings and liquidity than the bigger ones. Investors should consider their investment time horizon, risk tolerance and financial objectives before investing. 

Both indices provide exposure to the small cap market but are maintained by different index providers and use different methodologies to select and calculate their constituents. Nifty Smallcap 250 is a part of Nifty index composition and BSE 250 SmallCap is derived from BSE 500.