Nifty Smallcap 250 Quality 50 Index

The Nifty Smallcap 250 Quality 50 Index is a special and strategic index that consists of 50 top companies in the Nifty Smallcap 250 Index. This benchmark helps you to invest in small, high quality smallcap companies listed on the National Stock Exchange of India (NSE).

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What is the Nifty SmallCap 250 Quality 50 Index?

The Nifty Smallcap 250 Quality 50 Index is a stock market index that tracks the performance of the top 50 small-cap stocks in India that have been selected based on their quality scores. The quality score is a measure of a company's financial strength and profitability. It is calculated using a variety of factors, including return on equity, debt-to-equity ratio, and Earnings-per-Share (EPS) variability of every stock that is determined over a period of 5 years.

Unlike traditional small-cap indices, the Nifty Smallcap 250 Quality 50 Index focuses on selecting companies with a proven track record of strong fundamentals and high growth potential.

Highlights of Nifty SmallCap 250 Quality 50 Index:

  • The Nifty SmallCap 250 Quality 50 Index was launched on 15 March 2013 by the National Stock Exchange of India (NSE).

  • It is a strategic index that includes stocks from the Nifty Smallcap 250 Index and ranks them based on their quality score.

  • The quality score of each small-cap stock is calculated by considering its free-float market capitalization.

  • The index is designed to track the performance of 50 high-quality small-cap stocks in the Indian market.

  • The weight assigned to each stock in the index is determined by a combination of its market capitalization and quality score.

  • The constituent stocks of the index are reviewed and changed twice a year, in June and December, during the reconstitution of the Quality 50 index.

  • The Nifty SmallCap 250 Quality 50 Index aims to provide investors with exposure to fundamentally strong and well-performing small-cap companies.

  • It is one of the important benchmarks for investors looking to assess the performance of high-quality small-cap stocks in India.

  • The index's constituents are subject to periodic review and adjustments to ensure it reflects the changing market dynamics and company performance.

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Performance of Nifty Smallcap 250 Quality 50 vs. Other Indices

If you had invested Rs. 1 Lakh in the Nifty Smallcap 250 Quality 50 in 2013, today it would have been Rs. 7.15 lakh, which is almost 7.2 times of your investment.

Following is the performance of the NIFTY Smallcap 250 Quality 50 index over the years:

Index Name  3-Years Returns 5-Years Returns 10-Years Returns
Nifty Small Cap 250 Quality 50  36% 28.22% 26.8%
Nifty Small Cap 250 34% 26.17% 20%
Nifty Midcap 100 32% 24.79% 20%
NIFTY 50 17% 16.66% 13.6%

[Source: nseindia.com]

Which are the Constituent Stocks of the Nifty Smallcap 250 Quality 50?

The current 50 stocks as of 13 Mar, 2024, for the Nifty Smallcap 250 Quality 50 Index are as follows:

  • Cera Sanitaryware Ltd

  • Rallis India Ltd.

  • Gujarat State Fertilizers & Chemicals Ltd.

  • V-Guard Industries Ltd.

  • TTK Prestige Ltd.

  • KRBL Ltd.

  • Balaji Amines Ltd.

  • Galaxy Surfactants Ltd.

  • Ratnamani Metals & Tubes Ltd.

  • Can Fin Homes Ltd.

  • Cochin Shipyard Ltd.

  • Vaibhav Global Ltd.

  • Radico Khaitan Ltd.

  • Polyplex Corporation Ltd.

  • Engineers India Ltd.

  • Praj Industries Ltd.

  • Metropolis Healthcare Ltd.

  • Zensar Technolgies Ltd.

  • Orient Electric Ltd.

  • Birlasoft Ltd.

  • KPIT Technologies Ltd.

  • RHI Magnesita India Ltd.

  • Central Depository Services (India) Ltd.

  • Mastek Ltd.

  • CCL Products (I) Ltd.

  • Redington Ltd.

  • Godfrey Phillips India Ltd.

  • DCM Shriram Ltd.

  • KRBL Ltd.

  • Jamna Auto Industries Ltd.

  • Gujarat Pipavav Port Ltd.

  • Aarti Drugs Ltd.

  • Mahanagar Gas Ltd.

  • Carborundum Universal Ltd.

  • Avanti Feeds Ltd.

  • Century Plyboards (India) Ltd.

  • Finolex Industries Ltd.

  • Godfrey Phillips India Ltd.

  • NOCIL Ltd.

  • Transport Corporation of India Ltd.

  • KEI Industries Ltd.

  • CCL Products (I) Ltd.

  • RITES Ltd.

  • Finolex Cables Ltd.

  • JP Chemicals & Pharmaceuticals Ltd.

  • Castrol India Ltd.

  • PCBL Ltd.

  • DC Shriram Ltd.

  • Cochin Shipyard Ltd.

  • TCI Express Ltd.

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benfiits of investingbenfiits of investing

Top 10 Small Cap Companies  on Nifty 250 Index by Weightage

Here is the individual weight of the top 10 small-cap companies featured on the Nifty Smallcap 250 Quality 50 index as of Mar 13, 2024:

Stock Name Weight (%)
Castrol India Ltd. 4.24
Indian Energy Exchange Ltd. 3.76
Sonata Software Ltd. 3.67
KEI Industries Ltd. 3.33
Central Depository Services (India) Ltd. 3.19
Gujarat State Petronet Ltd. 2.87
Triveni Engineering & Industries Ltd. 2.72
Sanofi India Ltd. 2.62
Gillette India Ltd. 2.58
Mahanagar Gas Ltd. 2.55

[Source: nseindia.com]

The Nifty Smallcap 250 Quality 50 index ensures that the weight of each individual small-cap stock remains below 5%. This effectively reduces concentration risk for any index fund or exchange-traded fund (ETF) following this strategy index.

People Also Read: Nifty Midcap 150

What Are the Sectors Included on Nifty Smallcap 250 Quality 50 Index?

The index is composed of stocks from a variety of sectors. The sectors included as of Feb 29, 2024, are:

Sector Weightage (%)
Financial Services 14.45
Capital Goods 13.94
Information Technology 12.91
Fast Moving Consumer Goods 10.16
Oil, Gas & Consumable Fuels 9.66
Chemicals 8.02
Services 6.21
Healthcare 5.86
Construction 4.3
Consumer Services 4.1
Automobile and Auto Components 3.65
Metals & Mining 2.29
Consumer Durables 1.54
Media, Entertainment & Publication 1.22
Forest Materials 1.22
Textiles 0.46

[Source: nseindia.com]

As of Mar 13, 2024, the maximum weightage of about 14.45% of the index is distributed towards the financial services sector and 14.45% in the capital goods sector. The minimum exposure of Nifty Smallcap 250 Quality 50 Index is towards textiles stocks that accounted for only around 0.46% of the index.

The index is a good option for investors who are looking for growth potential and diversification.

What Are the Returns of Nifty Smallcap 250 Quality 50?

As of Mar 13, 2024, the Nifty Small-cap 250 Quality 50 has returned 20.40% since its inception. This is significantly higher than the returns of the broader market, which has returned 15.75% over the same period.

Below are the returns of this index:

Investment Period Returns (%)
1 year 60.19%
5 year 28.22%
Since Inception 20.40%

[Source: nseindia.com]

The strong returns of the Nifty Small-cap 250 Quality 50 are due to a number of factors, including the outperformance of small-cap stocks, and the strong performance of the quality companies that make up the index.

People Also Read: ICICI Prudential Nifty Midcap 150

Is Nifty SmallCap 250 Quality 50 Index Fund a Smart Investment?

Small-cap stocks are equity shares of companies ranked 250th or lower in terms of free-float market capitalization.

  • Benefits of Investing in Small-Cap Stocks

    • Growth Potential: These companies offer significant growth opportunities due to their relatively smaller size.

    • Higher Growth Potential: Small-cap companies often experience substantial growth as they expand and explore new markets.

    • Opportunity for Appreciation: This growth can lead to significant gains for investors as the stock prices appreciate.

  • Risks Associated with Small-Cap Stocks

    • Higher Volatility: Small-cap stocks are more volatile, especially in the short term, due to lower liquidity and market capitalization.

    • Sensitivity to Market Fluctuations: They are sensitive to market changes, economic fluctuations, and company-specific developments, resulting in potential short-term losses.

  • Long-Term Investment Strategy

    • Recommended Time Frame: It is advisable to stay invested for at least 5 years or longer to maximize returns.

    • Potential Returns: Over the long run, the growth potential of small-cap stocks can outweigh short-term fluctuations, offering attractive returns for patient investors.

  • Considerations for Investors

    • Assess Risk Tolerance: Investors should carefully evaluate their risk tolerance and investment goals before allocating funds to small-cap stocks.

    • Long-Term Perspective: A long-term perspective is crucial for navigating the volatility and maximizing the benefits of investing in small-cap stocks.

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Nifty Smallcap 250 Quality 50 Index Methodology

The Nifty Smallcap 250 Quality 50 Index follows a robust methodology for the selection and inclusion of stocks to ensure a high-quality representation of small-cap companies. Here are the key points outlining the methodology:

Eligibility Criteria:

  • Stocks within the Nifty Smallcap 250 index at the time of review are considered for inclusion in the Nifty Smallcap 250 Quality 50 Index.

  • Non-F&O (Futures and Options) stocks within Nifty Smallcap 250 index are ineligible if the instances of the stock hitting the upper or lower circuit (price band) during the past 6 months as of the cut-off date are equal to or more than 20% of the total trading days over the same period.

  • Companies having a percentage of pledged promoter shares greater than 20% are not included in the index.

  • Bottom 10 percentile stocks based on the Value score, 6-month average daily turnover, and high volatility are also excluded from the index.

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High-Quality Score Selection:

  • The top 50 stocks with the highest quality score within the eligible universe are chosen for inclusion in the Nifty Smallcap 250 Quality 50 Index.

  • The quality score of each stock is derived by multiplying the square root of the free float market cap with the quality score of that stock.

Index Rebalancing and Reconstitution:

  • The Nifty Smallcap 250 Quality 50 Index is rebalanced and reconstituted on a semi-annual basis in June and December.

  • Data for rebalancing and reconstitution is based on the last trading day of May and November, respectively.

  • Four weeks’ notice is given to the market before implementing any changes.

Index Governance:

A professional team manages all NSE indices, including the Nifty Smallcap 250 Quality 50 Index.

The governance structure consists of three tiers:

  • Board of Directors of NSE Indices Limited.

  • Index Advisory Committee (Equity).

  • Index Maintenance Sub-Committee.

The Nifty Smallcap 250 Quality 50 Index methodology focuses on selecting high-quality small-cap companies while considering factors such as trading activity, promoter share pledges, and market capitalization. Investors looking for exposure to promising small-cap companies with strong fundamentals may find the Nifty Smallcap 250 Quality 50 Index an attractive option for their portfolios.

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Follow the steps below:

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Step 3: Provide necessary information like city, age, name etc. 

Step 4: Compare different plans based on their performance, ratings, and other relevant details.

Step 5: Choose the Max Life Insurance plan to avail the benefits of the Small Cap Fund.

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FAQs on Nifty Smallcap 250 Quality 50 Index

  • What is the Nifty Smallcap 250 Quality 50 Index?

    The Nifty Smallcap 250 Quality 50 Index is an index comprising 50 high-quality small-cap companies listed on the National Stock Exchange of India (NSE). These companies are selected from the Nifty Smallcap 250 Index based on various quality parameters.
  • Which investment plan includes the small-cap index fund?

    The Max Life Online Savings ULIP plan offers the advantages of a small-cap index fund, providing investors with the potential for higher returns. This means that the plan allocates a portion of the invested money into a small-cap index fund, which comprises stocks of smaller companies with significant growth potential. 
  • How is the Nifty Smallcap 250 Quality 50 Index different from other small-cap indices?

    The Nifty Smallcap 250 Quality 50 Index focuses on high-quality small-cap companies, which are selected based on criteria such as financial performance, governance, and stability. This index is designed to offer investors exposure to small-cap stocks with a track record of strong fundamentals.
  • What are the popular small-cap indices in India 2023?

    Some of the popular small-cap indices in India are: 
    • Nifty Smallcap 250
    • Nifty Smallcap 100
    • Nifty Smallcap 50
    • S&P BSE Smallcap
    • S&P BSE 250 Smallcap, 
    • S&P BSE Smallcap Select Index.
  • Are small-cap investments considered equity or debt investments?

    Small-cap investments are equity investments as they involve investing in equity shares of companies. Therefore, the mutual fund^^ taxation rules of equity mutual funds are applicable to these investments.
  • How long should I invest in small-cap stocks?

    It is suggested that one should stay invested in small-cap stocks for a period of 5 years or longer to maximize the potential investment benefits from these types of investments. Investing for the long term can help navigate the short-term volatility associated with small-cap stocks.
  • What is an Index Fund? 

    An Index Fund is a type of mutual fund or exchange-traded fund (ETF) that aims to replicate the performance of a specific financial market index, such as the Nifty Smallcap 250 Quality 50 Index. These funds invest in a portfolio of securities that closely match the composition of the benchmark index.
  • What are the benefits of investing during an NFO (New Fund Offer)? 

    Investing during an NFO can offer the following advantages:
    • Lower NAV: During an NFO, the units of the fund are available at a fixed price, usually Rs 10 per unit. This allows investors to buy units at a lower NAV, potentially maximizing their gains when the NAV appreciates.
    • Small AUM Advantage: A new fund has a smaller Asset Under Management (AUM), making it easier to manage and maneuver investments. This can lead to potentially higher returns in the initial years of the fund.
    • Opportunity for Early Investment: Investing during an NFO allows investors to be part of the fund's growth from its inception, potentially benefiting from the fund's future performance.
  • Why should a customer consider investing in a small-cap fund like the Nifty Smallcap 250 Quality 50 Index? 

    • Potential Future Leaders: Small-cap companies with sound fundamentals and management have the potential to become future leaders in the market, providing attractive returns to investors.
    • High Growth Potential: Small-cap companies are in the early stages of their growth cycle, which can lead to substantial growth opportunities for investors.
    • Diversification: Small-cap funds typically invest in a wide array of stocks across different sectors, reducing the risk associated with concentrated investments in a single sector.
    • Opportunities in New & Emerging Sectors: Small-cap companies often operate in new and emerging sectors, providing investors with exposure to potentially lucrative opportunities.
  • Is it advisable to invest in the Nifty Smallcap 250 Quality 50 Index for the long term?

    Yes, investing in the Nifty Smallcap 250 Quality 50 Index can be suitable for long-term investors who believe in the growth potential of high-quality small-cap companies. However, it is essential to assess your risk tolerance and investment goals before making any investment decisions.
  • How can I invest in the Nifty Smallcap 250 Quality 50 Index?

    Investors can invest in the Nifty Smallcap 250 Quality 50 Index through exchange-traded funds (ETFs) or mutual funds that track this index. These investment options are available through various financial institutions and brokerage platforms
  • Are assured returns offered by small cap investment? 

    No, small cap investments do not offer assured returns. Small cap stocks are those that are issued by small companies with a relatively low market capitalization. These companies are typically newer and have less established track records than larger companies. As a result, they are considered to be more risky investments.

*Past 5 Year annualised returns as on 01-05-2024
*All savings plans are provided by the insurer as per the IRDAI approved insurance plan. Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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