December 01, 2025
4 mins read
If you take a look at the stock market in India, you will note that there are numerous indices tracking various groups of companies. One of those indices is the Nifty CPSE Index, which is a reflection of Central Public Sector Enterprises (CPSEs), companies that are owned and operated by the Government of India.
You’ll find 12 such companies in this index, including NTPC, ONGC, and Power Grid Corporation of India. These businesses operate in vital areas like power, oil, gas, and infrastructure. Because they’re government-backed, they play an important role in India’s economic structure.
When it comes to gauging the performance of public sector businesses, the Nifty CPSE Index provides an understandable measure. It is a common method used by analysts and investors to analyse the performance of large companies that are controlled by the government or other state institutions.
Here’s a quick look at the companies that make up the Nifty CPSE Index right now:
Company Name |
NTPC Ltd |
Oil and Natural Gas Corporation Ltd |
Power Grid Corporation of India Ltd |
Coal India Ltd |
Bharat Electronics Ltd |
NHPC Ltd |
Oil India Ltd |
SJVN Ltd |
Cochin Shipyard Ltd |
NLC India Ltd |
NBCC (India) Ltd |
Each of these represents a different piece of India’s industrial backbone — from energy and mining to electronics and infrastructure. When you track this index, you’re essentially seeing how these major public enterprises move together.
The Nifty CPSE Index was launched to help the government with its disinvestment plans. In simple terms, it gave the government a way to sell small portions of its stake in public companies while letting you, as an investor, participate in their growth.
All shares in this index are admitted on the basis of free-float market capitalisation – in other words, only shares held in public hands count. Only companies designated Maharatnas, Navratnas and Miniratnas can be included in the index.
In recent years, the index has also been linked to Exchange Traded Funds (ETFs). These offer another way you can invest in a collection of these companies, as an amalgam of your investment. The index is revised twice a year to be refreshed and aligned it with the underlying market flows. It’s one of the ways you can assess some of the indications of how India’s public sector is incorporating itself in the market.
The Nifty CPSE Index follows a free-float market capitalisation method. That simply means it focuses on the market value of shares available for public trading, not the ones held by the government.
Here’s how it’s calculated:
Component | Explanation |
Stock Price | The current market price of each stock in the index. |
Free-Float Shares | Only includes shares available for public trading, excluding government-held shares. |
Free-Float Market Capitalisation | Calculated as Stock Price × Free-Float Shares for each company. |
Total Free-Float Market Capitalisation | The total of all 12 companies’ free-float values. |
Index Divisor | A constant used to maintain consistency in index value over time. |
Formula | Index Value = (Σ (Price × Free-Float Shares)) / Index Divisor |
Corporate Actions | Adjusted for stock splits, bonuses, and rights issues. |
Rebalancing | Updated twice a year to include the top CPSEs by market size. |
When you hear that the Nifty CPSE Index is up or down, it reflects these collective movements. It gives you a single number that summarises how India’s largest public companies are performing.
If you’re keeping track of Nifty CPSE stocks, here are the main things that move them. These are the forces you should be aware of when you see market changes.
Government policies: Policies related to disinvestment, taxation, and sector reforms can have a direct impact on how these companies fare. It has been demonstrated that even policy changes that appear to be insignificant can alter investor confidence.
Commodity prices: As many of these firms are associated with oil, coal, or gas, movements in global prices can significantly impact their profits and margins.
Economic conditions: The general health of the economy - inflation, interest rates, growth, etc., can impact demand for power and energy, which affects CPSE revenues.
Regulatory changes: If changes occur in areas, such as pricing, production or environmental impact that generate additional costs for key sectors, such as power and oil, the effects may be severe.
Dividends: One often observes that CPSEs issue regular dividends. Regular dividends can assist in stabilising share values when market conditions become volatile.
Global trends: Events such as geopolitical tensions or trade restrictions can affect export-oriented CPSEs.
Public sentiment: At times, investor sentiment about government policies or elections can also impact these shares.
Operational efficiency: The overall operational efficiency, such as the quality of management, projects and execution, plays an important role in long-term performance.
Additional Read: What is the NIFTY Infrastructure Index
If you value stability and consistency, you may like the familiar mix of Nifty CPSE stocks. Here are some of the benefits:
Regular dividends - These companies are consistent with their dividend payments, providing an ongoing income generator for your portfolio.
Support from the government - Being state-owned and funded helps ensure that the company will continue operating, even during times of uncertainty.
Benefit from having exposure to certain crucial industries - Which gives you exposure to key industries like power, energy, and infrastructure that drive India's economy.
Less volatility - Because of their size and relevance, CPSE stocks usually are not as volatile as most of the private sector stocks on any particular trading day.
Reasonable valuations - They tend to trade at or below reasonable valuations, giving long-term investors the opportunity to consider them for potential portfolio balance.
Potential for disinvestment to unlock intrinsic value - Their government business unit's disinvestment options can sometimes accelerate the most significant unrelated stock price increase relative to its prior market price.
Providing balance in your portfolio - If your portfolio is heavily weighted towards a private sector or technology-focused investments, adding CPSE stock can provide sufficient diversification.
Long-Term demand - India's developing energy and infrastructure demand can support the demand for their services.
ETF convenience - Rather than tracking all the CPSE companies, you can hold all the CPSE companies available in the ETF in a single ETF.
Political influence: Government influence may, in some cases, delay decisions, or prioritise public imperatives over profit-driven objectives.
Bureaucratic slow pace: These companies may be slower to adapt to changing markets and respond to exporting decisions.
Concentration in sectors: The index takes a very concentrated view of oil, gas and power. Any slow down in any of those will have an impact on the overall index.
Uncertain disinvestment deadlines: Should any disinvestment deadlines be missed or pushed back, it can temporarily diminish investor confidence.
Regulatory constraints: New compliance burdens or regulatory changes can create additional operating costs.
A lack of innovation: Many CPSEs spend less on innovating than private firms, delaying growth.
Undesirable performance: Some CPSEs may underperform a broader index due to inefficiencies and a lack of nimbleness.
Volatility of world price: Several CPSEs' revenues depend on the price of commodities in the global markets.
Dividends: A decrease in profits may prohibit dividend payments and potentially diminish investor confidence.
Investing in the Nifty CPSE Index can be accomplished in three straightforward ways.
Purchase CPSE shares directly: You can open a trading account and demat account, and buy shares directly of the CPSEs, such as NTPC, ONGC or Power Grid. In doing so, you will personally manage your mix of holdings and adjust them to match your own risk tolerance.
Purchase ETFs: Suppose you'd like a much simpler method of investing. In that case, you can invest in Exchange Traded Funds that mirror the Nifty CPSE Index. Generally, these ETFs hold all of the CPSEs in the same proportion as they're weighted in the benchmark index. You can buy and sell the ETFs on the exchange, just like you would your own stocks.
Mutual funds: There are also a number of mutual funds out there that use public sector themes or CPSE-linked portfolios. Again, through a mutual fund, you'll get the exposure to holding the same stocks, but your funds will be managed.
Regardless of which of these methods you choose, it's always a good idea to follow government policies and market updates so that you can follow what is moving the stocks.
When you invest in CPSE stocks or ETFs, you are primarily subject to tax on two occasions: capital gains and dividends.
Short-term (STCG): Gains from sale within a year are taxed at 20%.
Long-term (LTCG): If you hold for more than 1 year, a 12.5% tax applies on gains above ₹1.25 lakh. No indexation applies.
Dividends are added to your income in the year received and taxed at your slab; some taxes may also come out of your dividend amount if your dividends cross certain levels.
Tax benefits through CPSE ETFs: Certain CPSE ETFs can have a Section 80C deduction of up to ₹1.5 lakh with a mandatory 3-year lock-in period, similar to ELSS.
Transaction costs and records: Securities Transaction Tax (STT) is included in your total cost now, as a transaction cost. Keeping records of the transactions and the transaction dates will make this process simpler when you are filing your returns.
If you are conscious of when you buy or sell, and use items like tax-loss harvesting, you can be better at managing your effective (total) tax outflow.
The Nifty CPSE Index helps you track how India’s largest government-owned companies are performing. These are the firms that keep essential sectors — like energy, infrastructure, and manufacturing — running.
Following this index gives you a feel for how government-sponsored industries shape India's market. Alternatively, you can use the Nifty CPSE Index to track how public enterprises add to the economy if you'd like to know how their performance changes your investment outlook and have a mind for long-term market analysis.
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Nifty CPSE stocks are shares of top-performing Central Public Sector Enterprises selected based on free-float market capitalisation from Maharatnas, Navratnas, and Miniratnas, listed in the Nifty CPSE Index.
Some of the popular Nifty CPSE stocks include Power Grid Corporation, NTPC, ONGC, Bharat Electronics, and Coal India, known for stable performance, strong dividends, and strategic importance in India’s economy.
The objective of Nifty CPSE is to track the performance of select public sector enterprises and facilitate government disinvestment through ETFs, while offering investors exposure to government-backed businesses.
Nifty CPSE works by tracking the market performance of 12 select CPSE stocks using free-float market capitalisation, with periodic rebalancing to ensure accurate sector representation and index relevance.
The Nifty CPSE Index is managed and maintained by NSE Indices Limited, a subsidiary of the National Stock Exchange (NSE), which is responsible for index methodology, rebalancing, and constituent selection.
The Nifty CPSE Index was launched in 2014, making it over 10 years old as of 2025. It was created to support the Indian government’s disinvestment strategy through CPSE-based investment options.
You can invest in Nifty CPSE stocks by buying individual CPSE shares or investing in CPSE Exchange Traded Funds (ETFs) through a demat and trading account with a stockbroker.
The Nifty CPSE Index consists of 12 Central Public Sector Enterprises that are listed and selected based on their free-float market capitalisation and trading activity on Indian stock exchanges.
Stocks are chosen based on free-float market capitalisation from eligible Maharatnas, Navratnas, and Miniratnas, with active trading history and government holding of more than 51% equity.
Yes, Nifty CPSE ETFs or constituent stocks can be bought today and sold tomorrow, depending on market liquidity, brokerage rules, and intraday trading availability in your trading account.
Yes, investing in Nifty CPSE can be beneficial for stable dividends and long-term growth, but sector concentration and political influence require careful analysis and alignment with investment goals.
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