BSE 500 Quality 50 stocks list

The universe is the BSE 500. At each rebalancing only common stocks qualify, and each must meet three tests: its annualised traded value ranks in the top 450, its turnover ratio is at least 20%, and it traded on every working day of the reference period. Annualised traded value is the median of the monthly medians of daily traded values over the prior six months, on 250 trading days a year. The turnover ratio is that figure divided by the average daily float-adjusted market capitalisation.

Eligible companies are ranked by quality score. A company whose earnings per share or book value per share is negative gets a score but cannot enter. The top 30 are selected whether or not they are current members. Current members ranked 31 to 70 then fill the list in rank order until it reaches 50. If it is still short, non-members are added in rank order. Companies placed on the Graded Surveillance Measure list are dropped monthly and must stay off it for six consecutive months before they are reconsidered.

The quality score combines three ratios. Return on equity is trailing 12-month earnings per share divided by the latest book value per share. The accruals ratio is the change in net operating assets over the last year divided by average total assets over the last two years. Financial leverage is the latest total debt divided by book value. Each ratio is capped at the 2.5th and 97.5th percentile values of the universe, then converted to a z-score, which measures how far a value sits from the universe average in units of standard deviation. For the accruals and leverage ratios the sign is reversed, so a lower ratio gives a higher score.

The three z-scores are averaged. If one is missing the other two are averaged, and a company needs at least one to be scored. For companies in Financial Services or the Realty sector, the accruals ratio is not used. The average is limited to between -4 and 4. A positive average Z gives a quality score of 1 plus Z, a negative one gives 1 divided by (1 minus Z), and zero gives 1.

Each company is weighted by its float-adjusted market capitalisation weight in the eligible universe multiplied by its quality score. An optimisation then applies two limits. A single company may hold at most the lower of 4% and 20 times its float-adjusted market capitalisation weight in the eligible universe, and any one macro-economic indicator group of the India Industry Classification Structure, such as Financial Services, may hold at most 30%. Excess weight is redistributed in proportion to the quality weights, so that tracking error is minimised. If the optimisation fails, the company limit is relaxed first and then the 30% limit.

The index is rebalanced quarterly, effective at market open on the Monday after the third Friday of Mar, Jun, Sep and Dec. Fundamental data is taken as of the last day of the month before the rebalancing date. No company is added between rebalancings, so after deletions for events such as mergers, delistings or suspensions the index can hold fewer than 50 companies.

Its base date is 20 Jun 2005, its base value 1000, and it was launched on 20 May 2025.