NSE’s launch of India’s first EV Index & it’s True Impact on the Indian EV Ecosystem

NSE Indices CEO Mukesh Agarwal urged that “the launch of the Nifty EV & New Age Automotive index will facilitate the creation of products that would create an opportunity for asset managers to invest in the electric vehicle and new age automotive market thereby providing an investment vehicle to investors.”

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The Nifty EV & New Age Automotive index, a first of its kind in India, is all set to provide the Indian EV ecosystem with a much anticipated leg-up. Composed of industry leaders and popular names in the EV space, the index aims to track and support the growth of companies not only involved in the development of EVs and new-age automotive vehicles, but also those involved in manufacturing EV batteries, raw materials, and technology.

The larger objectives of the index

The new index launch comes strategically at a time when the Indian government is actively pushing for the adoption of vehicles that run on batteries and alternate fuels. Keeping this in mind, there are 3 paramount additional objectives that the Nifty EV & New Age Automotive Index is expected to fulfil -

  • India aims to attract investments from global EV manufacturers.
  • The index’s launch aligns with and re-emphasizes the Indian government's promotion of EVs and their rapid adoption in the country.
  • The index stands to further promote and support the “Make-in-India” initiative, simultaneously contributing to the “Viksit Bharat” agenda.

How does this impact the industry and its participants?

The launch of this thematic index is revolutionary for the industry and its players across the board and presents several positive developments for India’s EV industry. Allow us to expound upon a few :

  1. Access to a high-growth sector: The Indian EV market is expected to undergo unprecedented growth in the years that are to follow. The Nifty EV & New Age Automotive index provides a simple way to invest in this ever-evolving sector and capitalise on its long-term prospects. The Index also opens up more opportunities for common retail investors to the benefits of a hyper-growth industry that is instigating a global mobility revolution.
  2. Incentivising EV companies to go public: The index offers previously unlisted companies to go public by incentivising them with enhanced visibility, potentially attracting investor interest and consequently leading to larger capital inflows.
  3. Diversification, liquidity & transparency: Comprising companies across various segments of the EV and new-age automotive space, the index offers diversification benefits, circumventing the risks associated with picking individual stocks. Additionally, As an NSE index, investors benefit from transparency and liquidity, allowing them to conveniently track industry performance and enter or exit positions at their own discretion.
  4. Education & awareness: Due to the environmental and monetary benefits of being part of the EV growth story, investors and consumers will be encouraged and motivated to learn about the industry, therefore boosting awareness and early adoption of EV technology on a larger scale.
  5. Innovation & advancements: To compete with industry leaders and contribute purposefully to the EV ecosystem, participants will be forced to innovate and advance at a rapid pace. The healthy competition that comes with being part of such an index is sure to lead to widespread EV innovation and sustainable development across the sector.

Final thoughts

The various index participants along with the institutional and retail investor will bear witness to the transformation instigated by the launch of the Nifty EV & & New Age Automotive Index which currently has 33 stocks. The leading participants by weightage include Bajaj Auto (7.08%), Tata Motors (6.49%), Mahindra (5.83%), Maruti Suzuki (5.28%), Exide Industries (4.78%), Bosch (4.56%), Samvardhana Motherson International (4.45%), Eicher Motors (4.42%), CG Power and Industrial Solutions (4.30%), and Himadri Speciality Chemical (4.28%).

Though the index will constitute many companies that will undergo reconstitution and rebalancing, presently, the above listed form the foundation of the Nifty EV & New Age Automotive Index, which adequately showcase the diverse mix of automotive and industrial leaders and innovators. With modern and renowned companies currently hinting at their respective IPOs, it’s safe to assume that the launch of the new index is going to be keeping investors, innovators, and EV enthusiasts on the edge of their seats.