Chintan Haria- Principal - Investment Strategy, ICICI Prudential AMC
Unlike traditional indices which are based on the market capitalisation of the underlying holdings – giving a larger weight to stocks with higher market capitalisation and lower weight to those with lower market capitalisation, equal weight indices are constructed by allocating equal weight to all their constituents.
Despite several global macroeconomic and geopolitical headwinds, India’s growth trajectory remains promising with real gross domestic product slated to grow at 6.5% in FY26. Riding this wave of domestic growth momentum are India’s large businesses which, because of their market leadership, are better positioned to benefit from India’s growth potential. Of these large businesses, which typically form part of the Nifty 50 index, the Nifty Top 15 Equal Weight Index aims to track the performance of the top 15 businesses selected based on 6-month average free-float market capitalisation and then allocated to, equally. Stocks in this index cover a wide range of sectors such as financial services, automobiles, fast moving consumer goods, information technology, oil and gas, telecommunication and construction.
Here are five reasons why one should consider investing in the Nifty Top 15 Equal Weight index:
1. The largest businesses enjoy many benefits of being large such as higher brand recognition and trust which makes it easy for them to retain existing customers and attract new customers. They enjoy economies of scale because of their bulk purchases and better bargaining power, thus lowering production costs and increasing their margins. Larger businesses also enjoy easier access to low-cost capital. They attract better talent. They can invest in research and development, which helps them improve their products and services. They have a wider reach thanks to strong distribution channels and high marketing budgets which helps them diversify across regions and categories. All of these factors increase their potential for steady long-term growth. The Nifty Top 15 Equal Weight index has thus historically generated better long-term returns compared to the Nifty 50 index.
2. The 15 largest Indian businesses are also more stable and mature. They have the reserves and resources to get through difficult times and are thus more reliable investments in periods of economic uncertainty or market stress.
3. In the market capitalisation-weighted indices, stocks with higher market capitalisation tend to have an outsized impact on the index’s performance. In an equal weighted index, all stocks have an equal impact on fund performance, thus reducing concentration risk.
4. As of May 2025, the Nifty Small cap 100 Index has a price to earnings ratio of 32. The Nifty Midcap 100 and Nifty 50 index are trading at 33- and 22-times earnings, respectively. The P/E ratio of Nifty Top 15 Equal Weight index is 21, which is below its 3-year average. Large caps are thus more reasonably valued right now compared to their small and mid-cap peers. Within large caps, an equal weighted exposure to the 15 largest Indian businesses is available at even better valuations and is thus a smart investment.
5. Investing in the Nifty Top 15 Equal Weight index can be done passively through Exchange Traded Funds or Index funds which mimic its performance.
A Nifty Top 15 Equal Weight ETF invests in the Nifty Top 15 Equal Weight index. Its units trade on exchanges like shares offering investors liquidity at real-time, transparent prices using a Demat account. A Nifty Top 15 Equal Weight Index fund is the mutual fund route to invest in the Nifty Top 15 Equal Weight index. Here, the investor can transact directly with the mutual fund at end-of-day prices. Investors can also systematically invest in the index using the Systematic Investment Plan (SIP) that index funds offer. Both ETFs and Index funds have low expense ratios as they passively mimic the underlying index.