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Open
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19094.58
| Company | Market Cap | Market Price | Sector |
|---|---|---|---|
2,71,814.13 | 371.85 -8.20 (-2.16%)▼ | Aerospace & Defence | |
13,352.82 | 419.90 -7.80 (-1.82%)▼ | Mining & Mineral products | |
1,33,126.11 | 403.40 -6.60 (-1.61%)▼ | Finance | |
29,368.84 | 2,563.80 -38.60 (-1.48%)▼ | Aerospace & Defence | |
56,065.73 | 1,529.50 -19.60 (-1.27%)▼ | Aerospace & Defence |
What is the BSE PSU index?
The BSE PSU index is a sectoral index managed by the Bombay Stock Exchange (BSE), specifically designed to track the performance of the leading Public Sector Undertakings (PSUs) listed on the BSE. PSUs are companies in which the government holds a significant stake, often exceeding 51%, and these entities play a crucial role in India’s economic development across diverse sectors such as banking, energy, infrastructure, engineering, mining, and transportation.
The BSE PSU Index provides a comprehensive snapshot of the price movements and performance of top government-owned companies, serving as a benchmark for investors, analysts, and policymakers interested in the public sector’s contribution to the Indian equity market. The index was created to highlight the growing importance and market capitalisation of PSUs in India’s financial landscape. It is commonly used for benchmarking the performance of PSU-focused mutual funds and exchange-traded funds (ETFs), as well as for tracking the broader sentiment towards government-owned enterprises.
The index is reviewed and rebalanced semi-annually to ensure it remains representative and relevant as the PSU landscape evolves, reflecting changes in government policy, disinvestment strategies, and sectoral reforms. Monitoring the BSE PSU index gives investors valuable insight into the performance, strengths, and challenges of India’s key public sector companies, which often serve as barometers of the nation’s economic direction and policy priorities.
BSE PSU index stocks selection criteria
The selection criteria for the BSE PSU index are rigorous and transparent, ensuring that only the most significant and investable government-owned companies are included. The initial universe consists of all listed companies classified as Public Sector Undertakings (PSUs) on the BSE. To be eligible, a company must have a minimum of 51% government ownership, either by the central or state government, directly or indirectly. The next filter is market capitalisation, with only the top PSUs by free-float market capitalisation being considered for inclusion.
Liquidity is another major parameter; only those stocks with sufficient trading volumes and frequency over a defined period are selected, ensuring the index remains investable and truly reflects market activity. The index also aims to represent a broad cross-section of the public sector, including companies from banking, oil & gas, power, infrastructure, mining, and engineering sectors. Compliance with regulatory norms, minimum public shareholding criteria, and sound corporate governance practices is mandatory for all constituents.
The composition of the index is reviewed and rebalanced semi-annually, during which companies may be added or removed based on changes in government holding, market capitalisation, trading activity, or sectoral representation. This selection methodology ensures that the BSE PSU index serves as a credible and dynamic benchmark for tracking the government’s footprint in the Indian equity market, adapting to changes in government disinvestment, sectoral reforms, and capital market trends.
How is the BSE PSU index calculated?
The BSE PSU index is calculated using the free-float market capitalisation-weighted methodology, in line with global best practices for equity indices. Under this approach, each constituent company’s weight in the index is proportionate to its free-float market capitalisation, which is determined by multiplying the current share price by the number of shares available for public trading (excluding government holdings, promoters, and other locked-in shares). The index value is computed as:
(Sum of free-float market capitalisation of all constituent PSUs / Index divisor) × Base value
The base year for the BSE PSU index is 1998-99, and the base value was set at 1,000 points. The index divisor is a key figure that is adjusted periodically to account for corporate actions such as stock splits, bonus issues, rights issues, and changes in the list of constituents, ensuring continuity and consistency in the index value over time. The index is reviewed and rebalanced semi-annually to reflect the latest market developments, company performance, and changes in government shareholding.
BSE PSU FAQs
How to invest in the BSE PSU index?
Investing in the BSE PSU index is possible through sectoral mutual funds and Exchange Traded Funds (ETFs) that track the index. To begin, open a demat and trading account with a registered broker, select a BSE PSU-focused fund or ETF, and invest your desired amount either as a lump sum or via a Systematic Investment Plan (SIP).
What is the objective of the BSE PSU index?
The primary objective of the BSE PSU index is to serve as a benchmark for tracking the performance of India’s leading government-owned companies across vital economic sectors. The index offers investors a transparent and reliable gauge of the public sector’s contribution to the Indian equity market, helping them monitor trends, assess risks, and make informed investment decisions.
Factors that can impact performance of the BSE PSU index
The performance of the BSE PSU index can be influenced by a range of factors, including government policies, disinvestment strategies, regulatory reforms, sectoral developments, global economic trends, commodity price fluctuations, and macroeconomic indicators like interest rates and inflation. Changes in government ownership, management efficiency, and corporate governance can also significantly affect index performance.
Is investment in the BSE PSU index safe?
Investing in the BSE PSU index offers exposure to some of India’s largest and most stable companies, but it is not without risks. The public sector is often subject to policy changes, political influences, and sector-specific volatility. While the index provides diversification across multiple sectors, investors should carefully assess their risk tolerance and stay updated on government policies and market trends before investing.
Benefits of investing in the BSE PSU index
Investing in the BSE PSU index provides unique advantages, such as exposure to a diversified portfolio of government-owned enterprises across critical sectors of the Indian economy. The index allows investors to participate in the growth and stability of established PSUs, benefit from potential government reforms and disinvestment measures, and hedge against market volatility through sectoral diversification. Additionally, PSUs often offer attractive dividend yields, making the index appealing to income-seeking investors.
Key considerations before investing in the BSE PSU index
Before investing in the BSE PSU index, it’s important to recognise that the public sector is subject to unique challenges, such as regulatory risks, political interference, and changing government priorities. While PSUs often enjoy market dominance, their performance can be affected by delayed policy implementation, operational inefficiencies, or global commodity price shocks. Investors should diversify across sectors and monitor developments in government policy, fiscal measures, and international trade. Long-term investors may benefit from the stability and dividend potential of PSUs, while those with higher risk appetite can capitalise on market cycles driven by policy reforms and disinvestment drives.