Description
BSE Index Services announces methodology changes to the BSE REIT & INVIT Index effective February 3, 2026, including modifications to constituent weighting calculations and introduction of fast-tracked IPO provisions.
Summary
BSE Index Services Pvt Ltd announces methodology changes to the BSE REIT & INVIT Index effective February 3, 2026. The key changes include modification of the reference price calculation date for constituent weightings (from Wednesday to Monday prior to the second Friday of rebalancing month), introduction of a minimum 65% aggregate weight requirement for REITs at basic industry level, and implementation of fast-tracked IPO provisions for significantly sized REIT/INVIT listings.
Key Points
- Methodology changes effective from February 3, 2026
- Reference price calculation date changed from Wednesday to Monday prior to second Friday of rebalancing month
- New requirement: REITs classified at basic industry level must have minimum 65% aggregate weight
- Fast-tracked IPO provision introduced for immediate inclusion of significantly sized REIT/INVIT IPOs
- Eligible IPOs must have trading frequency above 80% and float-adjusted market cap above INR 100 crores
- Existing capping rules remain: individual security capped at 33%, top three securities aggregate capped at 63%
- Equal weighting applies when index has three or fewer stocks
Regulatory Changes
Reference Price Calculation:
- Previous: Closing prices on Wednesday prior to second Friday of rebalancing month
- New: Closing prices on Monday prior to second Friday of rebalancing month
Constituent Weighting Rules:
- New requirement added: Constituents classified as REITs at basic industry level must maintain minimum aggregate weight of 65%
- Existing capping rules maintained: 33% per security, 63% for top three securities aggregate
- Equal weighting applies for indices with ≤3 stocks
- 33% cap applies for indices with 4 stocks
Fast-Tracked IPO Inclusion:
- Previously: Not applicable
- New: Significantly sized REIT/INVIT IPOs can be immediately included
- Eligibility criteria: Trading frequency >80% during reference period, float-adjusted market cap >INR 100 crores
Compliance Requirements
- Index constituents and passive fund managers tracking the BSE REIT & INVIT Index should prepare for rebalancing based on new methodology
- Fund managers must account for the modified reference price calculation date in their rebalancing schedules
- Compliance with minimum 65% REIT aggregate weight requirement for portfolio construction
- Monitor newly listed REIT/INVIT IPOs that may qualify for fast-track inclusion between regular rebalancing cycles
Important Dates
- February 3, 2026: Effective date for methodology changes
- Quarterly Rebalancing: Effective at open of Monday following third Friday of March, June, September, and December
- Reference Price Date: Monday prior to second Friday of rebalancing month
Impact Assessment
Market Impact: Medium - The methodology changes will affect index composition and weighting calculations, impacting passive funds and ETFs tracking the BSE REIT & INVIT Index. The shift in reference price date from Wednesday to Monday may result in different constituent weights compared to the previous methodology.
Operational Impact: Index fund managers will need to adjust their rebalancing processes to accommodate the new reference date and ensure compliance with the 65% minimum REIT weight requirement. The introduction of fast-tracked IPO provisions allows for more timely inclusion of significant new REIT/INVIT listings, potentially reducing tracking error for passive funds.
Investment Impact: The minimum 65% aggregate weight requirement for REITs ensures the index maintains its primary focus on real estate investment trusts while allowing INVIT exposure. Fast-track provisions improve index representativeness by enabling quicker inclusion of major new listings.
Impact Justification
Methodology changes affect index construction and rebalancing procedures for REIT & INVIT index constituents, impacting passive funds tracking this index