NSE Launches Nifty Sugar & Ethanol and SFBMFI Indices


By Dalal Street Investment Journal (DSIJ)

Summary :


NSE Indices Limited launched two thematic indices on June 17, 2026 — Nifty Sugar & Ethanol and Nifty Small Finance Banks & Microfinance Institutions. Both indices carry a base date of March 31, 2021, a base value of 1000, and a 15% stock weight cap based on free-float market capitalisation

NSE

On June 17, 2026, the index services subsidiary of the National Stock Exchange, known as NSE Indices Ltd, released two theme-based indices: the Nifty Sugar & Ethanol Index and the Nifty Small Finance Banks & Microfinance Institutions Index (SFBMFI). The two indices will be used as benchmarks for passive products such as exchange-traded funds (ETFs), index funds, and structured products.

What Are the Two New Indices?

The Nifty Sugar & Ethanol Index tracks 15 stocks from the FMCG sector, specifically companies that are directly engaged in the manufacturing or production of sugar or ethanol. India's ethanol blending programme has picked up pace over the past few years, making this segment more relevant from both a policy and a market standpoint. A dedicated index gives asset managers a defined, rule-based reference point when building investment products around this theme.

The second index, Nifty Small Finance Banks & Microfinance Institutions, is set up to track the most liquid small finance banks and microfinance institutions listed on the NSE. Small finance banks were created with a clear purpose: to extend formal banking access to segments that have historically been left out, including small businesses, marginal farmers, and lower-income households. Microfinance institutions operate on similar ground, offering small-ticket loans to borrowers who sit outside the coverage of conventional banks. Bringing these entities together under one index gives investors a straightforward way to track this part of the financial sector.

How Are the Indices Constructed?

Both indices are built on the same methodology. Each stock's weight is determined by its free-float market capitalisation, with a ceiling of 15% per security. That cap makes sure no single stock takes an outsized share of the index, keeping the exposure distributed across constituents.

The base date for both indices is March 31, 2021, with a base value of 1000. So the index level at any point in time reflects how the underlying stocks have collectively performed since that date.

Stock lists will be reviewed and updated every six months — this is called reconstitution. Weight rebalancing will happen every quarter, in March, June, September, and December. This schedule keeps the indices aligned with how the market actually looks at any given time.

Role in Passive Investing

These indices are intended to function as benchmarks for asset managers and as reference indices for passive funds. Fund houses can now use them as the basis for ETFs or index funds that simply mirror the index composition.

Passive investing has been on a steady upward curve in India. Index fund and ETF assets have grown as more investors move towards transparent, lower-cost options rather than actively managed funds. When thematic indices are clearly defined and rule-based, it becomes easier for fund houses to launch products on top of them and easier for investors to know exactly what they are buying into.

The Nifty Sugar & Ethanol Index fits well with the current policy direction. The government has aggressively pushed for ethanol blending with petrol for several years, prompting many sugar producers to expand their distillery capacities to meet demand. An index built around this theme gives passive products a ready framework to track this space.

Similarly, the Nifty Small Finance Banks & Microfinance Institutions Index covers a segment that has grown rapidly, albeit while experiencing periods of distinct volatility. Having a consolidated, trackable index for this group fills a gap for investors who want direct, focused exposure to this corner of the financial sector.

Source: Dalal Street Investment Journal (DSIJ), ET.

About the Author

SEBI Registered Research Analyst (INH000006396).


Founded in 1986, Dalal Street Investment Journal (DSIJ) brings decades of experience in India’s equity markets. DSIJ's research combines fundamental analysis with price action, guided by disciplined risk management and capital preservation. They follow a structured, data-driven approach designed to help investors and traders make informed decisions beyond short-term market noise. 

Published Date : 19 Jun 2026

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Content Partner - Dalal Street Investment Journal Wealth Advisory Private Limited



This article is for educational purposes only and should not be considered investment advice. Market investments are subject to risks. DSIJ Wealth Advisory Private Limited is a SEBI-registered Research Analyst (Reg. No: INH000006396) and Investment Adviser (Reg. No: INA000001142). Please consult your financial adviser before investing. 

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