The gradual upturn in the economy and the expectation of higher growth in the future has prompted the Bombay Stock Exchange (BSE) to launch an IPO index on Monday.
The index will track the value of companies for two years on listing after they complete their initial public offering (IPO). Follow-on public issues will not be a part of this index. The index would include ceiling on weightings of index constituents, where the market capitalisation weight would 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 firm has a weight in excess of 20 per cent in the index,” the exchange said in a release on Monday, adding that a minimum of 10 scrips would be maintained on the index.
The exchange added that the scrip, to be eligible for the IPO index, has to have a minimum free-float market capitalisation of Rs 100 crore on its first day of listing and the company would be excluded from the index on the second Monday of the month after two years of listing.
Base date of the index is May 3, 2004, while base index value is set to 1,000 points.