Nippon India BSE Sensex Next 30 ETF and Index Fund: Promising passive fund in current market conditions

Nippon India MF has launched Nippon India BSE Sensex Next 30 ETF and Nippon India BSE Sensex Next 30 ETF Index Fund. These are passive funds which will track the BSE Sensex Next 30 index. BSE Sensex Next 30 index comprises of 31^st to 60^th stocks by market capitalization listed on the Bombay Stock Exchange. The New Fund Offers (NFOs) have opened for subscription on 21^st May 2025 and will close on 4^th June 2025. In this article, we will review this NFO.

Current market situation

The Indian equity market is in a consolidation phase amidst global trade uncertainties. The ceasefire with Pakistan after recent military escalations between the two nations also provided relief. The sovereign rating downgrade of the United States by the Moody's due to rising US fiscal deficit is causing some volatility in the global equity markets, especially in the emerging markets. On the other hand, lower crude prices, weakening dollar and RBI's accommodative monetary policy stance creates conditions for further rate cuts.

Market outlook

Demand growth is likely to triggered by rural demand recovery, lower interest rates, cooling inflation, tax benefits announced in 2025 Union Budget (income up to Rs 12.75 lakhs except from income tax) and front loading of Government spending. Low base of Q1 FY 2025 corporate earnings will support higher corporate earnings growth for Q1 FY 2026. Overall, the market remains resilient due to favourable macroeconomic factors and domestic growth dynamics. Given the medium to long term growth prospects and near term uncertainties from global risk factors and large cap strategy may be better positioned from a risk reward perspective for investors.

Why large cap?

• Large cap stocks are less volatile than mid and small cap stocks. Historical data shows that large caps have performed better than mid and small caps during periods of drawdown (see the chart below).
  
  

  

  Source: Advisorkhoj Research, Period: 1^st May 2015 to 30^th April 2025



• Large caps can give better risk adjusted returns compared to midcaps and small caps. The chart below shows the average rolling returns by risk (standard deviation of rolling returns) for different investment periods of large cap, midcap and small cap indices. You can see that large caps have outperformed mid and small caps across all the periods.
  
  

  

  Source: Nippon India MF, as on 30^th April 2025



• Return on equity is an indicator of quality in equity investments. Large cap stocks have delivered superior ROEs compared to midcap and small cap stocks.
  
  

  

  Source: Bloomberg, as on 31^st March 2025



• Valuations (P/E multiples) of large cap stocks are more reasonable compared to midcap and small cap stocks (see the chart below)
  
  

  

  Source: Bloomberg, as on 30^st March 2025

About BSE Sensex Next 30

• The Top 10 companies by market capitalization commands a high weightage in the Sensex. BSE Sensex Next 30 provides more balanced exposure to middle tier companies (31^st to 60^th companies by market cap) in the large cap segment (see the chart below).
  
  

  

  Source: Asia Index Private Limited, as on 30^th April 2025



• BSE Sensex Next 30 provides exposures to the stocks (31^st to 60^th by market capitalization) that are under-represented in other large indices like Sensex, Nifty 50, Nity 100, Nifty Next 50 etc. BSE Sensex Next 30 ETF or index fund will add richer diversification to your investment portfolio.
  
  

  

  Source: Asia Index Private Limited, National stock Exchange, as on 30^th April 2025



• BSE Sensex Next 30 has produced more consistent outperformance across different market conditions over longer investment tenures compared to other large cap indices.
  
  

  

  Source: Asia Index Private Limited. Period: 20^th June 2014 to 30^th April 2025



• The chart below shows the growth of Rs 10,000 invested in the BSE Sensex Next 30 on 20^th June 2014 till 30^th April 2025 versus the Sensex. You can see that BSE Sensex Next 30 TRI delivered higher wealth creation compared to BSE Sensex TRI over the last 10 years or so.
  
  

  

  Source: Asia Index Private Limited. Period: 20^th June 2014 to 30^th April 2025

Why invest in Nippon India BSE Sensex Next 30 ETF or Index Fund?

Who should invest in Nippon India BSE Sensex Next 30 ETF / Index Fund?

• Investors seeking capital appreciation over long investment tenures


• Investors who seek the large cap stock exposure beyond the Sensex or Nifty


• Investors having a long-term investment horizon (minimum 5 years)


• Investors with high-risk appetite


• Investors who have demat account can invest in Nippon India BSE Sensex Next 30 ETF. You can sell your ETF units in the stock exchange through your trading account at prevailing market prices during market hours.


• Investors who do not need demat accounts can invest in Nippon India BSE Sensex Next 30 Index Fund


• You can invest in Nippon India BSE Sensex Next 30 Index Fund from your regular savings through Systematic Investment Plan (SIP)

Investors should consult their financial advisors or mutual fund distributors if Nippon India BSE Sensex Next 30 ETF or Index Fund is suitable for their investment needs.