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Dubai: Standard & Poor's, in partnership with India Index Services & Products Limited, has announced the launch of two new investable Sharia indices for the Indian equities market - the S&P CNX 500 Sharia and S&P CNX Nifty Sharia.
These new Sharia indices are derived from the S&P CNX 500 and S&P CNX Nifty indices, which are the leading gauges of the Indian equity market. The S&P CNX 500 covers more than 90 per cent of the total market capitalisation and more than 80 per cent of total traded volume on the National Stock Exchange (NSE), and is the complete benchmark for the Indian stock market. The S&P CNX Nifty represents the largest and most liquid companies listed on the NSE.
"These new Sharia-compliant indices provide investors with a comparable investable portfolio while adopting explicit selection criteria defined by Islamic law. They are indicative of the appetite among investors for investable Sharia-compliant indices covering all types of markets," says Alka Banerjee, vice-president of Index Services at Standard & Poor's.
Each of the new indices typically covers over 60 per cent the market capitalisation of the parent index, though this can vary depending on the number of companies found to be compliant. Historical performance analysis, however, indicates that there is a high level of correlation between the underlying indices and their new Sharia-compliant versions.
The S&P CNX 500 Sharia comprises 263 companies, while the S&P CNX Nifty Sharia comprises 40 companies. Standard & Poor's Shariah Indices are screened by Ratings Intelligence Partners, a Kuwait-based consulting company specialising in the Islamic investment market. Ratings Intelligence Partners researchers interface directly with a dedicated Shariah supervisory board.
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