NIFTY India Tourism Index: NSE’s new index to track travel and tourism stock

The National Stock Exchange (NSE) subsidiary, NSE Indices, has launched a new thematic index called the Nifty India Tourism Index.

The Nifty India Tourism Index aims to mirror the performance of stocks from the Nifty 500 Index which represents the travel and tourism theme. The largest 30 stocks from eligible basic industries are selected based on the six-month average free-float market capitalisation (m-cap), as mentioned on the official NSE India website.

With a base date of April 1, 2005, the new index will have a base value of 1,000. The index will be reconstituted (referring to the change in the basket of companies) twice a year, and rebalanced (related to the adjustment of the weightage of each company) quarterly to highlight changes in the travel and tourism sector.

While serving as a benchmark for asset managers, the index will be a reference point for passive investment options such as exchange-traded funds (ETFs), index funds, and structured products.

The index will track a maximum of 30 companies from the Nifty 500 that are most significant from the point of view of the travel and tourism industry. At present, it comprises 17 stocks, with weightage based on their periodic capped free-float market capitalisation. However, no single stock can account for over 20% of the index, thus ensuring diversification,

In the past few years, the index has delivered a gain of 41.98%. The index has a 5-year compound annual growth rate (CAGR) of 19.49%. From the time of its inception on April 1, 2005, the index has generated a CAGR of 12.19%.

At 20.01%, InterGlobe Aviation (NS:INGL) Ltd, the parent company of IndiGo, holds the highest weight in the index. The Indian Hotels Co. (NS:IHTL), which is a Tata Group company, has a 19.89% share. Similarly, the Indian Railway Catering and Tourism Corp. (IRCTC) share is at 14.4%. Besides this, GMR Airports Infrastructure Ltd with a 9.72% share and Jubilant Foodworks (NS:JUBI) Ltd., the operator of Dominos Pizza in India, with an 8.78% share.

Highlights of Nifty India Tourism Index

• The index has a base date of April 01, 2005, with a base value of 1,000
• Stocks part of the Nifty 500 index at the time of review are eligible for inclusion in the index
• Stocks forming part of the eligible basic industries shall be eligible to be included in the universe at the time of review
• The index comprises a maximum of 30 stocks
• The weight of each stock in the index is based on free-float market capitalisation
• The index is reconstituted semi-annually and rebalanced quarterly
• Stock weights are capped at 20%

(Source: NSE India)