What is the Nifty Capital Goods Index? Constituents, Historical Performance, and Selection Criteria

Published on June 29, 2026 | 6 min read

What is the Nifty Capital Goods Index? Constituents, Historical Performance, and Selection Criteria

Key Takeaways

The Nifty Capital Goods Index is a sectoral index that tracks the performance of the top 50 companies from the capital goods sector within the Nifty Total Market Index.
The constituent companies in the Nifty Capital Goods Index are selected based on the six-month average free-float market capitalisation from the Nifty Total Market Index, with preference given to stocks that are available for derivatives trading on the NSE.
The index is reconstituted semi-annually and rebalanced quarterly to ensure it accurately reflects the performance of the Capital Goods sector.
Investing in the Nifty Capital Goods Index offers several key benefits, including diversification, economy-linked performance, long-term growth, and an inflation hedge.
Nifty Capital Goods Index carries certain investment risks such as sector concentration, sensitivity to economic downturns, fluctuation in raw material prices, changes in government policies, and project delays.

On June 15, 2026, NSE Indices Limited, a subsidiary of NSE Limited, introduced 11 new sectoral indices to provide a more detailed representation of the performance of sectors. One of the newly established indices includes the Nifty Capital Goods Index.

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Let’s understand what the Nifty Capital Goods Index is, how it works, its constituents, historical performance, and selection criteria.

What is the Nifty Capital Goods Index?

The Nifty Capital Goods Index is a sectoral index that tracks the performance of the top companies belonging to the capital goods sector. The constituent companies included are involved in manufacturing and distributing machinery, equipment, and tools used to produce other goods or services. The capital goods sector is considered the backbone of the manufacturing economy, as it manufactures essential equipment and caters to sectors such as defence, construction, aerospace, and power.

The index consists of a maximum of 50 stocks, picked from the Nifty Total Market Index based on the eligibility criteria set by the NSE Indices Limited.

To ensure the Nifty Capital Goods Index accurately reflects the performance of the Capital Goods sector, the index is reconstituted semi-annually and rebalanced quarterly.

The Nifty Capital Goods Index can be used for benchmarking fund portfolios, launching exchange-traded funds (ETFs), index funds, and other sector-related investment products.

How Does the Nifty Capital Goods Index Work?

The Nifty Capital Goods Index measures the performance of the leading capital goods companies included in the Nifty Total Market Index. The constituent companies included in the index are selected based on their six-month average free-float market capitalisation, with preference given to stocks available for derivatives trading on the NSE to ensure liquidity. This helps investors enter and exit positions more efficiently.

The Nifty Capital Goods Index is maintained and governed by a three-tier governance structure comprising the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity), and the Index Maintenance Sub-Committee.

Constituents of the Nifty Capital Goods Index

The following are the top 10 prominent companies included in the Nifty Capital Goods Index, ranked as per their weight as of May, 2026.

Company’s Name	Weight (%)
Bharat Electronics Ltd.	10.66
Hindustan Aeronautics Ltd.	5.92
Cummins India Ltd.	5.76
Tata Motors Ltd.	5.75
Suzlon Energy Ltd.	5.01
GE Vernova T&D India Ltd.	4.62
CG Power and Industrial Solutions Ltd.	4.56
Bharat Heavy Electricals Ltd.	4.41
Polycab India Ltd.	3.63
Hitachi Energy India Ltd.	3.54

Nifty Capital Goods Index Historical Performance

The NSE Indices Limited has calculated the Nifty Capital Goods Index’s historical performance based on the historical performance of its constituent stocks over the past years as per their respective weight in the index.

As of May 2026, the Nifty Capital Goods Index delivered a 5-year total return of 31.13%, which is three times more than the Nifty 50 index's 9.87%.

The Nifty Capital Goods Index has a Beta of 1.00 in relation to the Nifty 50, meaning it moves with the broader market. For example, if the Nifty 50 index rise/fall by 10%, the Nifty Capital Goods Index may also rise/fall by 10%

Source: NSE Indexogram

From 2005, the Nifty Capital Goods Index has delivered steady growth with interim corrections during the 2008-9 global financial crisis and 2020-21 pandemic. Post-pandemic, the index experienced a consistent uptrend and hit a record-breaking peak in 2024-25, followed by a sharp correction and volatility.

Selection Criteria for the Nifty Capital Goods Index

The following are the selection criteria for the stocks included in the Nifty Capital Goods Index.

The Nifty Capital Goods Index has a base date of April 01, 2005, with a base value of 1000.
Stocks included in the Nifty Total Market Index at the time of review are eligible for inclusion in the index.
Only stocks of the basic industries that belong to the capital goods sector are eligible to be included from the Nifty Total Market Index at the time of review.
Preference is given to stocks available for derivatives trading on NSE.
The index must comprise a maximum of 50 stocks.
The weight of each stock in the index is based on free float market capitalisation.
Individual stock weights are capped at 20%.

Benefits of Investing in the Nifty Capital Goods Index

The following are the benefits of investing in the Nifty Capital Goods Index.

Diversification

Investing in the Nifty Capital Goods Index provides exposure to top companies involved in manufacturing essential machinery and equipment for other sectors. The index spreads your investment across the various stocks, reducing overreliance on a few companies.

Economy-Linked Performance

The capital goods sector has a cyclical nature, and hence, when the country's economy is in the growth phase with infrastructure developments, new projects, and high government spending on public infrastructure, the sector tends to perform well. The government is implementing programs like PM Gati Shakti and PLI schemes that support the growth of the sector.

Long-term Growth

As the Indian economy develops with increased government spending on public infrastructure and defence, supporting the construction, aerospace, and defence sectors, the Nifty Capital Goods Index investment can offer capital appreciation in the long term.

Inflation Hedge

Inflation refers to the erosion of purchasing power. Since the Nifty Capital Goods Index consists of companies involved in the manufacturing of essential equipment and caters to infrastructure and industrial growth, it acts as an inflation hedge and preserves the value of your investment.

Risks of Investing in the Nifty Capital Goods Index

The following are the risks associated with investing in the Nifty Capital Goods Index.

Sector Concentration

Since the Nifty Capital Goods Index is a sectoral index, it is exposed to sector concentration risk. If the capital goods sector faces a downturn due to economic or other factors, the index may decline, which could negatively impact your investments.

Sensitivity to Economic Downturns

The Nifty Capital Goods Index is highly sensitive to economic downturns as its performance is tied to economic expansion and government capital expenditure. If the country faces an economic downturn or the government reduces its capex, the profitability of constituent companies and their stock performance may be adversely affected.

Fluctuation in Raw Material Prices

The companies in the capital goods sector rely heavily on raw materials to produce equipment and machinery. If the costs of raw materials and global commodity prices increase, it could shrink companies' profit margins.

Changes in Government Policies

The capital goods sector is highly sensitive to changes in government regulations, such as land, environmental, and statutory approvals, capital expenditure, and trade policies.

Project Delays

Delays in project implementation or execution could lead to cost overruns and delays in revenue generation, impacting the company's profit margins.

The Nifty Capital Goods Index is a sectoral index that measures the stock performance of the most prominent companies belonging to the capital goods sector included in the Nifty Total Market Index. Its constituents are selected based on the criteria set by NSE Indices Limited, which is responsible for maintaining, reconstituting, and rebalancing the index.

Before investing in the Nifty Capital Goods Index, investors must consider all its benefits and associated risks to make informed investment decisions.

FAQs

What is the Nifty Capital Goods Index?

The Nifty Capital Goods Index is a sectoral index that tracks the performance of the top companies' stocks within the capital goods sector.

When was the Nifty Capital Goods Index launched?

The Nifty Capital Goods Index was launched by NSE Indices Ltd. on June 15, 2026.

How are stocks selected for the Nifty Capital Goods Index?

The stocks are selected for the Nifty Capital Goods Index from the Nifty Total Market Index based on the eligibility criteria prescribed by NSE Indices Ltd.

How often is the Nifty Capital Goods Index reconstituted and rebalanced?

The Nifty Capital Goods Index is reconstituted semi-annually and rebalanced quarterly by NSE Indices Ltd.

About Author

Mariyam Sara

Sub-Editor

holds an MBA in Finance and is a true Finance Fanatic. She writes extensively on all things finance whether it’s stock trading, personal finance, or insurance, chances are she’s covered it. When she’s not writing, she’s busy pursuing NISM certifications, experimenting with new baking recipes.