What is the Nifty CPSE index?

The Nifty CPSE Index is a thematic equity index comprising select listed Central Public Sector Enterprises (CPSEs) operating across sectors such as power, energy and related infrastructure, based on eligibility criteria defined by NSE Indices and the Government of India’s shareholding requirements. The index was created to support the Government of India’s disinvestment programme.

It currently consists of 11 CPSEs based on the NSE Indices factsheet as on December 9, 2025, though the list may change during scheduled reviews. The Nifty CPSE Index falls under thematic exposure rather than broad-market diversification.

Table of contents

• Introduction to Nifty CPSE index
• History and evolution of the Nifty CPSE index
• How is the Nifty CPSE index calculated?
• Primary factors to consider when assessing Nifty CPSE index performance
• Benefits of investing in Nifty CPSE stocks
• Risks and challenges of investing in Nifty CPSE stocks
• How to invest in Nifty CPSE index stocks
• Taxation and regulatory considerations

Introduction to Nifty CPSE index

The Nifty CPSE Index tracks select Central Public Sector Enterprises in which the Government of India holds a majority stake. The index was originally developed to facilitate the government’s disinvestment plans through the ETF route.

The Nifty CPSE Index represents a rules-based basket of eligible CPSE stocks, weighted according to the index methodology published by NSE Indices. Key points include:

• It includes listed CPSEs that meet NSE Indices’ eligibility and government shareholding criteria.
• It serves as the underlying benchmark for a CPSE-oriented ETF.
• It is part of NSE’s thematic index family rather than a broad diversified benchmark.

Also Read: What is Nifty: Meaning, Eligibility, Calculation and Benefits

History and evolution of the Nifty CPSE index

Here are the index’s key features

• Has a base date of January 1, 2009, and a base value of 1,000
• Was launched on March 18, 2014

While the methodology has continued to focus on CPSEs, the constituents are updated periodically based on eligibility criteria and free-float market capitalisation. The index is also followed by market participants because it serves as the underlying index for a CPSE-focused ETF. Although the overall theme remains centred on public sector enterprises, the precise list of companies and their weights may vary during each review.

How is the Nifty CPSE index calculated?

The index uses a free-float market capitalisation approach with periodic capping:

• Under this framework, constituent weights are based on free-float market capitalisation and are capped according to methodology rules to maintain balanced representation.
• The index has 11 constituents as per the latest available factsheet, subject to change.
• Index values are calculated in real time during market hours.

Rebalancing takes place quarterly, typically around March, June, September and December, ensuring the index reflects changes in free-float market capitalisation and eligibility conditions.

Also Read: Nifty 200 Index: Meaning, Characteristics & Selection Criteria

Primary factors to consider when assessing Nifty CPSE index performance

The performance of CPSE-linked indices may be influenced by several factors, including:

• Government policies and reforms: Changes in regulation, sector policies, disinvestment plans and guidance on government stakeholding may impact the valuations of CPSEs.
• Sector concentration: Many CPSEs operate in areas such as power, oil and gas, coal and defence, making sector developments, commodity prices and infrastructure spending influential.
• Interest rates and bond yields: CPSEs have historically paid dividents, and movements in interest rates may influence how investors evaluate such payouts relative to other investment avenues.
• Broader equity market sentiment: As listed equities, CPSE stocks may respond to macroeconomic expectations, fiscal policy developments and global market sentiment.

Benefits of investing in Nifty CPSE stocks

Investors may evaluate exposure to the Nifty CPSE Index for the following potential advantages:

• Targeted exposure to select government-owned companies operating in sectors aligned with national infrastructure and policy priorities.
• Historically consistent dividend payouts: Several CPSEs have historically declared dividends, although these are not assured and may vary.
• Portfolio-level exposure across CPSEs: An index-linked approach may provide diversified CPSE exposure compared to analysing and selecting individual PSU stocks.

Also Read: What is Nifty Next 50? Meaning, Benefits and How to Invest?

Risks and challenges of investing in Nifty CPSE stocks

CPSE-focused exposure also comes with certain risks that investors may consider carefully:

• Concentration risk: The index has a relatively limited number of constituents compared with diversified indices such as Nifty 50 or Nifty 500, which may lead to higher sensitivity to stock- or sector-specific movements.
• Policy and regulatory risk: CPSE operations may be affected by tariff regulations, pricing frameworks, subsidy policies and disinvestment decisions.
• Cyclicality and commodity exposure: Sectors such as power, coal and oil and gas may experience cyclicality linked to commodity prices and broader economic conditions, making returns relatively more volatile than diversified categories such as large cap mutual funds or broad-market index funds.
• Public-policy-driven priorities: Some CPSEs may have responsibilities linked to national policy objectives, which may influence capital allocation or operational decisions.

Given these characteristics, Nifty CPSE exposure may be considered a thematic or satellite allocation rather than a substitute for diversified equity mutual funds.

How to invest in Nifty CPSE index stocks

Investors may access Nifty CPSE-linked exposure through several routes:

• Purchasing shares of individual CPSEs that are part of the index, which requires stock-specific evaluation and periodic monitoring.
• Investing in an exchange traded fund (ETF) that aims to replicate the Nifty CPSE Index.

Investors considering investing in such a scheme through a Systematic Investment Plans (SIPs) may use an SIP calculator to estimate potential future values under assumed scenarios. The calculator is an aid, not a prediction tool. It may provide only an indicative picture.

Each route has different operational requirements and cost structures, and ETFs require a demat and trading account.

Taxation and regulatory considerations

A CPSE-focused ETF that replicates the Nifty CPSE Index will qualify as an equity-oriented scheme because it invests chiefly in domestic equity shares of CPSEs. The tax rate is as follows:

• Short-term capital gains (STCG): 20% on gains from units held for 12 months or less, plus applicable surcharge and cess.
• Long-term capital gains (LTCG): Gains from units held for more than 12 months are exempt up to ₹1.25 lakh per financial year. Gains above this limit are taxed at 12.5%, plus applicable surcharge and cess.

Investors need to track transaction dates carefully.

As tax rules may periodically change, investors may check the most recent guidelines or consult a qualified tax professional before making tax-related decisions.

Conclusion

The Nifty CPSE Index represents focused equity exposure to select government-owned enterprises. Understanding Nifty CPSE Index meaning, concentration and linkage to the government’s disinvestment framework may help investors see where it fits within a diversified allocation that already includes broad index funds or equity mutual funds such as large cap mutual funds, mid cap mutual funds, small cap mutual funds or flexi cap funds, to name a few. Because of the index’s concentration and sensitivity to policy and sector developments, it may be more suitable as a thematic or satellite allocation within a broader investment plan. Evaluating one’s risk appetite, time horizon and tax considerations may be helpful before taking exposure.

Frequently Asked Questions

What companies make up the Nifty CPSE Index?

As on December 9, 2025, the Nifty CPSE Index consists of 11 listed Central Public Sector Enterprises that meet NSE Indices’ eligibility criteria, according to the index’s official factsheet. The names and weights may change during scheduled reviews, and investors may refer to the latest constituent list published by NSE Indices.

How often is the Nifty CPSE Index rebalanced?

The index is rebalanced quarterly, with changes typically implemented around the end of March, June, September and December.

Can retail investors access Nifty CPSE ETFs?

Retail investors may access an ETF that track the Nifty CPSE Index by placing buy or sell orders in ETF units through a demat and trading account with a SEBI-registered intermediary.

What is the difference between Nifty CPSE and other Nifty indices?

Compared with broader indices such as Nifty 50 or Nifty 500, the Nifty CPSE Index focuses solely on select CPSEs and has fewer constituents. As a result, it may be more sensitive to sector- and policy-related developments than diversified indices.

How do government policies affect the Nifty CPSE Index?

Government policy actions, such as disinvestment plans, sector regulations, subsidy frameworks, pricing policies and capital expenditure guidance, may influence the valuations of underlying CPSEs.

Is Nifty CPSE suitable for conservative investors?

As it is a thematic equity index, Nifty CPSE exposure may not be suitable for conservative investors. The index represents equity-based exposure concentrated across a limited set of companies. It may therefore be more suitable for investors who have a high risk appetite, understand equity volatility and are evaluating targeted PSU exposure.

What are the tax benefits of investing in CPSE ETFs?

There are no specific tax benefits of investing in such an ETF. Equity-oriented funds tracking the Nifty CPSE Index are taxed as follows:

• Units held for more than 12 months qualify for LTCG treatment, with exemption up to ₹1.25 lakh per financial year and 12.5% tax beyond that.
• Units held for 12 months or less attract STCG at 20%, plus surcharge and cess.

These rates apply to all equity-oriented mutual funds and ETFs, not just CPSE-focused products.

Can I invest in Nifty CPSE through mutual funds?

Certain AMCs may offer CPSE-focused ETFs or equity mutual fund schemes aligned with PSU or CPSE mandates. Investors may refer to the Scheme Information Document (SID) to review the benchmark, investment strategy and risk factors before evaluating such exposure.