BSE Healthcare

What is the BSE Healthcare index?

The BSE Healthcare index is a sectoral index managed by the Bombay Stock Exchange (BSE), designed to track the performance of leading companies in India’s healthcare and pharmaceutical sector. Launched to provide a benchmark for market participants interested in the healthcare industry, the index comprises top-listed companies engaged in pharmaceuticals, hospitals, diagnostics, biotechnology, and other related healthcare services. By capturing the price movements of these key players, the BSE Healthcare index reflects the overall health, growth prospects, and risk factors associated with India’s healthcare sector.

The index is widely used by investors, fund managers, and analysts to monitor sectoral trends, benchmark the performance of healthcare-focused portfolios, and make informed investment decisions. The composition of the index is reviewed and rebalanced semi-annually to ensure it remains relevant and representative of the sector’s changing dynamics. By investing in or tracking the BSE Healthcare index, investors gain focused exposure to some of the most prominent and innovative healthcare companies in India, benefiting from the sector’s pivotal role in the country’s economic and social development.

BSE Healthcare index stocks selection criteria

The selection process for inclusion in the BSE Healthcare Index is systematic and ensures that only the most significant and liquid healthcare companies are represented. The initial universe consists of all healthcare-related companies listed on the BSE, including those in pharmaceuticals, hospitals, diagnostics, and biotechnology. From this pool, companies are shortlisted based on their free-float market capitalisation, ensuring only the largest and most influential players are selected.

Liquidity is another crucial criterion; only actively traded stocks with sufficient trading volume and frequency over the recent period are considered, ensuring the index remains investable and accurately reflects real market activity. Sectoral representation is also a key factor, with the aim of including a diverse range of healthcare segments within the index.

Finally, companies must meet regulatory requirements, maintain minimum public shareholding, and adhere to good corporate governance practices. The index is reviewed and rebalanced semi-annually, during which companies may be added or removed based on changes in their market capitalisation, trading activity, or sectoral relevance. This rigorous process keeps the BSE Healthcare index both current and reliable as a sectoral benchmark.

How is the BSE Healthcare index calculated?

The BSE Healthcare index is calculated using the free-float market capitalisation-weighted methodology, which is standard for most major indices. Under this method, each constituent’s weight is determined by its free-float market capitalisation – calculated as the company’s share price multiplied by the number of shares available for public trading (excluding promoter and other locked-in shares). The total free-float market capitalisation of all constituent stocks is divided by an index divisor and then multiplied by the base value to arrive at the index value.

The base year for the BSE Healthcare Index is 2001-2002, with the base value set at 1,000 points. The divisor is adjusted to account for corporate actions such as stock splits, bonus issues, and changes in the index constituents, ensuring continuity and comparability over time. The index is reviewed and rebalanced semi-annually to incorporate changes in the sector or the companies themselves. This calculation methodology ensures that the BSE Healthcare index accurately represents the market performance of India’s top healthcare companies, providing investors with transparent and timely sectoral insights.