Bharat 22 : Landmark in Indian Capital Market

Why I am calling it Land mark?

ETF industry is very large and developed in global market. In US, number of ETF are more than listed stocks. If you are big institutional investor, you can even make one another ETF as per your objectives. But in India, we don’t have that much large industry.  Most ETF are GOLD ETF. But only till 2014.

In 2014, Then UPA govt decided to make CPSE ETF and give this opportunity to Goldman sach. Goldman Sach used its global expertise and came up with ETF containing 10 CPSE. It was first try and went very well. It even outperform Sensex.

But that fund was also having big minus points. Like ONGC Holding 25%+ weight. Large part of it was FROM POWER SECTOR. ONLY PFC AND REC were Finance Companies and that also directly or indirectly connected with power. GOLDMAN SACH sold its Indian business shorty after it. Reliance Nippon Asset Management Company Bought it and then again NDA Govt came up with tranche of it.

With the success of the new way of disinvestment, Govt went one step further and added Its SUUTI stake of ITC, L&T, AXISBANK. This is Bharat 22.

There is one new Index constructed for it known as S&P BSE BHARAT 22

As you can understand, ONGC, NTPC, IOC, GAIL, COAL INDIA, BHARAT Electronics, Engineers India, REC, PFC, Oil India exist in both ETF.

Many of the companies in Bharat 22 are well managed and so some investors are thinking to replicate it buy buying the stocks individually. Main advantage of ETF is that it trades on exchange as one different security. So you don’t need to buy the securities in it differently.

Big disadvantage which I found while writing this is about majorly 3 companies.

  1. SJVNL and NBCC. well managed companies having great potential still lower than 1 % weight and L&T and ITC holding big weight?
  2. I dont have any problem about SBI. Even BOB is also good but why Indian Bank?

My view on most of companies is good. One can invest 5-10% of portfolio in this. Still i believe you can individually invest SJVN and NBCC.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter