How Stocks Enter the Nifty Microcap 250 Index

The index covers the 250 largest NSE-listed companies ranked below the Nifty 500. It is maintained by NSE Indices Limited, with oversight from an Index Advisory Committee (Equity) and an Index Maintenance Sub-Committee.

The index was launched on 10 May 2021. Its base date is 1 April 2005, and the base value is 1,000.

Who gets in and who is kept out

The index does not hold a hand-picked list of small companies. A stock enters only after passing a set of filters, applied in this order:

1. The company must be ranked beyond the Nifty 500 in the NSE universe.
2. It must rank within the top 1,000 on both average daily turnover and average daily full market capitalisation.
3. Among the companies that pass, the top 250 by average full market capitalisation are selected.

A stock that is already a member of the Nifty 500, or is being added to it, cannot enter the index. For this reason, a company that grows larger and moves into the Nifty 500 will leave the microcap group at a review.

The turnover test keeps out companies whose shares are traded very rarely, however large their market value may be.

Weights and twice-yearly reviews

Each stock in the index is weighted by its free-float market capitalisation which counts only the shares available for public trading. Shares held by promoters are left out, so the full market value of a company does not decide its weight.

The index is rebalanced twice a year. At every review, NSE Indices Limited uses average data for the six months ending on the cut-off date, and the list of members is checked again against the entry rules.

Calculation of the index is done in real time during market hours. Alongside the price index, a Total Returns variant is published, which is the version that includes dividends.

Current figures for the Nifty Microcap 250 Index are available on the NSE website.