BSE launches IPO index

The Bombay Stock Exchange (BSE) today announced the launch of a new BSE IPO index that will track the value of companies for two years after listing subsequent to successful completion of their initial public offering (IPO).

''Robust growth of the Indian economy at 6.7 per cent in 2008-09, and the expectation of higher growth in the future are expected to boost the primary market,'' a BSE statement said.

''For this and other reasons, it is an appropriate time to introduce to the market an indicator that will track primary market conditions in the Indian capital market,'' it added.

BSE continues to introduce index innovations with the launch of the IPO index, by introducing ceiling (capping) on weightings of index constituents. Market capitalisation weightings of index constituents will be limited to 20 per cent.

''If a constituent's market capitalisation would result in a higher weighting, the company's weight will be suitably adjusted to ensure that no single company has a weight in excess of 20 per cent in the index. However, between any rebalancing, weightage of any index constituent can exceed 20 per cent,'' it said.

 Summary of guidelines followed for BSE IPO index are as follows: