Bse 1000 index: Motilal Oswal Asset Management Company (AMC) has launched a new fund based on the BSE 1000 index. The company has described it as an important step in India’s rapidly developing capital market. Through this fund, investors will get exposure in the microcap segment, where investment has been limited so far.
Motilal Oswal AMC’s Passive Fund chief Prateek Oswal said that the BSE 1000 index funds offer opportunities in areas that are still under-penetrated. He said, “We believe that growth will come from the segments where there is not much investment yet.”
The BSE 1000 index consists of top 1,000 companies. It has 60% weightage largecap, 18% midcap, 9% smallcap and about 5% microcap companies. This index was launched earlier this year.
Interest in microcap segment increased
According to Oswal, there has been significant improvement in the market cap and liquidity of the microcap segment in the last few years. While the index weightage of this segment was only 3.13% 5-6 years ago, it has now increased to 6.63%. He said that during this time the average market cap has increased 6.5 times, and this share can go up to 8–10% in the coming years.
What is the problem in the microcap right now?
Oswal says that there is a lack of information about microcap companies. However, this makes it easier to search for value in this segment. He said, “While largecap gives more than 25 analyst coverage on stocks, only two analysts in microcaps do coverage. Even 45% of microcap stocks do not cover any analyst.”
Liquidity is no longer confident
Earlier, the biggest concern about investment in the microcap segment was liquidity. But, now according to Oswal, the liquidity in this segment has increased by about 13 times in the last five years. He said, “It has now been an investable segment, whereas earlier it was considered risky.”
Right step at the right time
Ashutosh Singh, MD and CEO of Asia Index, said that the depth of the Indian market is now becoming equal to the markets of developed countries. He said, “The Russell 1000 index launched in 1984 was on the market cap of $ 2.5 trillion. The Indian markets have now reached double this level.”
According to Singh, the average market cap of 500 shares of the index has increased by 9 times and the liquidity has increased by 13 times. He said that the BSE 1000 index shows this development and it will give investors a chance to participate in India’s diverse and fast growing equity market.
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