BAJAJ FINSERV ASSET MANAGEMENT LIMITED.
The Nifty Smallcap 250 Index is a widely used benchmark for investors tracking the country’s emerging indices. Also referred to as Nifty Smallcap, this index tracks the performance of companies listed 251 and beyond in terms of market capitalization on the National Stock Exchange. These are comparatively smaller companies and represent the emerging segment of India’s equity market. These businesses are considered to have the potential to deliver higher returns during favourable market phases but also involve higher risk. Investors can access the Nifty Smallcap 250 Index through index funds, mutual funds benchmarked against this index, or by directly investing in companies listed on the index.
Access to a carefully selected basket of listed small cap companies.
Chance to capture opportunities in expanding and developing businesses.
Exposure to companies that may offer intrinsic value and long-term potential.
Spread across a wide universe of smaller and emerging enterprises.
The Nifty Smallcap 250 Index includes companies ranked 251 to 500 by market capitalisation. It serves as a widely tracked benchmark in India, reflecting the performance of smaller firms relative to the overall market. It may be suitable for investors with a higher risk appetite and a long-term investment horizon.
Apart from the Nifty Smallcap, another widely used small cap benchmark is the BSE 250 SmallCap Index. Both comprise 250 companies ranked below the top 250 by market capitalisation and both are available in two variants — Price Return (PR) and Total Return Index (TRI). While the PR index reflects only price movements of constituent stocks, the TRI version includes both price appreciation and dividends reinvested, thus representing the total return an investor would earn if dividends were reinvested back into the index. The Bajaj Finserv Small Cap Fund is benchmarked against the BSE Smallcap 250 TRI.
Nifty Smallcap 250 TRI is maintained by NSE Indices Ltd, part of the National Stock Exchange. BSE 250 SmallCap TRI is maintained by Asia Index Pvt Ltd and is a part of the BSE (formerly Bombay Stock Exchange).
The BSE 250 SmallCap was launched in November 2017. Its first value date is September 16, 2005, and its base value is 1000. The Nifty Smallcap 250 was launched in April 2016, with a base date is April 1, 2005, and a base value of 1000.
Both indices are rebalanced semiannually – Nifty Smallcap 250 in March and September; BSE 250 SmallCap in June and December.
Benchmark reference
Uses the BSE 250 SmallCap TRI Index as a benchmark to compare performance.
3-in-1 approach
Combines quality, growth, and value to identify companies with strong fundamentals and long-term growth potential at reasonable valuations.
Bottom-up selection
Stocks are chosen based on individual company fundamentals, not just sector trends.
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A Systematic Investment Plan (SIP) is a way to invest in mutual funds by contributing small amounts at regular intervals. In fact, you can start with as little as ₹500, generally and choose the frequency of how often you’d like to invest – such as a weekly SIP plan, monthly SIP plan, quarterly SIP plan, and so on. Once you set up your SIP, your investments become automated. Your chosen amount will be automatically transferred to your selected mutual fund on the specified date. Systematic Investment Plans (SIPs) are a good way to build wealth over time using this ‘consistency is key’ approach. It’s important to note that the earlier you begin saving and investing, the better your financial prospects will be when you reach retirement age. So, starting a timely SIP investment can help you achieve your long-term financial goals while managing associated risks effectively.
Investors can choose from different SIP frequencies based on how regularly they wish to invest. The options below illustrate how each frequency works and what it may suit, without referring to any specific scheme or AMC.
| SIP Frequency | How it works & when it may be suitable |
|---|---|
| Daily SIP | Amount is invested every business day; may help spread investments across more market levels. |
| Weekly SIP | Investment occurs once a week; may suit investors who prefer a regular but not daily frequency. |
| Monthly SIP | A fixed amount is invested monthly; commonly used as it aligns with salary and budgeting cycles. |
| Quarterly SIP | Investment happens once every three months; useful for those who prefer fewer transactions. |
| Half-yearly SIP | Amount is invested twice a year; may work for investors who receive periodic inflows like bonuses. |
| Yearly SIP | A lump sum is invested once a year; suitable for those who prefer annual investment planning. |
A Systematic Investment Plan (SIP) allows you to invest a fixed amount at regular intervals in mutual funds. When you invest through SIP, your money is used to purchase units of the mutual fund based on the prevailing Net Asset Value (NAV). The NAV, which is based on the market value of the securities in a portfolio (among other factors) is the per-unit price of the fund on any given day.
Let’s take a closer look at how a Systematic Investment Plan (SIP) and Net Asset Value (NAV) interact. Suppose you invest ₹ 5,000 every month through SIP in an equity mutual fund. On your first investment date, if the fund’s NAV is ₹ 50 per unit, your ₹ 5,000 contribution will secure 100 units (₹ 5,000/₹ 50 = 100 units). Next month, market movements may affect the NAV. If it increases to ₹ 55, your ₹ 5,000 investment will fetch around 90.91 units (₹ 5,000/₹ 55). On the other hand, if the NAV decreases to ₹ 45, you will receive about 111.11 units (₹ 5,000 ÷ ₹ 45).
Since SIP investments are made at regular intervals, you end up buying more units when the market is down (lower NAV) and fewer when it’s up (higher NAV). This systematic approach, called rupee cost averaging, helps reduce the overall cost per unit over time. By investing in SIP in mutual funds, you can take advantage of market fluctuations without needing to time the market.
Investing in mutual fund SIP plan is not difficult or expensive. SIPs give you the freedom to invest as much as you like at a frequency that suits you.
Disciplined investing: Once you set up an SIP, the instalment is debited from your bank account at your chosen frequency – daily, weekly, monthly etc. It’s a one-time process that can help you reap lifelong growth opportunities.
Professional management: Once you invest in SIP, investment experts do the rest. Each scheme is overseen by a fund manager, who designs and manages your portfolio based on their expertise.
Rupee-cost averaging: With rupee-cost averaging in SIPs, you can focus on your long-term goals without having to time the market. SIPs do the work for you.
In an SIP, a fixed amount is invested at regular intervals. So, you purchase more units when markets are down and fewer when they are up. Over time, this typically reduces your per-unit price – which means you earn more if the market goes up. This is known as rupee-cost averaging.
Flexibility: You can start a new SIP with an increased amount when your income increases. You can also decrease the amount, stop your SIP, or pause it if unexpected expenses come up.
A Systematic Investment Plan (SIP) allows you to invest an amount of your choice at regular intervals. Daily, weekly, fortnightly, monthly, or quarterly – choose the frequency that’s right for you!
There are a few ways in which an SIP differs from a lumpsum investment–
ELSS (Equity-Linked Saving Scheme) is a type of mutual fund with tax-saving benefits under Section 80C. SIP (Systematic Investment Plan) is a way to invest regularly in any mutual fund, including ELSS. You can make your pick depending on the factors below –
Anytime is a good time to start an SIP, but the earlier and more consistent you are, the better the results may be. The sooner you start, the more you benefit from compounding. Even small amounts invested early can grow significantly over time. Mentioned below are some scenarios when you should consider starting an SIP
While investing in SIP can help you build long-term wealth, it is essential that you consider the below-mentioned things before starting your SIP investments:
Choosing a suitable SIP type depends on your financial goals, risk appetite, and income growth. A well-planned SIP strategy can help build wealth efficiently over time!
Starting an SIP early in your career can make a difference to long-term potential wealth creation. The earlier you begin, the more time your investments may get to potentially grow through the power of compounding. This also helps build financial discipline, as you set aside a fixed amount regularly. In addition, SIPs benefit from rupee-cost averaging, where you purchase more units when markets are down and fewer when they are up, balancing out market volatility over time.
Let’s take an example. Suppose two individuals, Aman and Rohan, start investing ₹5,000 per month in an index fund. Aman begins at the age of 25 and continues till 60, while Rohan starts at 35 and invests till the same age. Even though Aman invests just 10 years earlier, the extra time allows his investments to potentially grow to a much larger corpus due to compounding.
*Example for illustrative purposes only.
This shows that when it comes to SIPs, the key is not timing the market but giving your money time in the market. Starting early allows your investments to work harder and for longer, for you.
Investing directly in Nifty small cap stocks involves higher volatility, lower liquidity, and greater sensitivity to market movements. While small cap companies may offer high potential returns, they can also face significant short-term losses during market corrections or adverse economic conditions.
Small cap stocks are highly sensitive to changes in market sentiment. During volatile phases, their prices can swing sharply, causing potential short-term declines. Long-term investors should focus on company fundamentals and growth potential instead of reacting to daily price fluctuations.
Both NSE and BSE are regulated, reliable exchanges in India. NSE generally offers higher liquidity and faster trade execution, while BSE has a broader history and more listed companies. The choice depends on trading convenience, stock availability, and personal preference.
During a market correction, avoid emotional decisions or panic selling. Review the fundamentals of your holdings, maintain a long-term perspective, and consider SIPs to benefit from rupee-cost averaging, as small cap stocks may recover over time with improving market conditions.
NSE is the largest stock exchange in India in terms of daily turnover and trading volume. BSE is older and lists a greater number of companies but records comparatively lower trading activity.
Lot sizes on NSE vary by segment and instrument type. For equity shares, one lot typically equals one share, while futures and options contracts have specified lot sizes determined periodically by the exchange.
Neither is inherently better. Both are regulated, reliable exchanges with strong systems and investor safeguards. NSE offers greater liquidity and faster execution, while BSE provides historical depth and wider company listings. The choice depends on investor preferences and trading requirements.
No, direct cross-exchange trading is not possible. If you buy a stock on NSE, you must sell it on NSE. However, since many stocks are listed on both exchanges, you can choose which exchange to trade on before making a purchase.
Whether a stock listed on NSE is suitable depends on its fundamentals, valuation, and long-term business potential. Evaluate financial strength, industry outlook, and growth drivers before investing rather than choosing based solely on the exchange.
Nifty small cap stocks may deliver potential long-term wealth creation due to growth opportunities, but they carry high risk. Investors with patience, long investment horizons, and higher risk appetite may consider exposure through SIPs or diversified small cap mutual funds.
The calculator alone is not sufficient and shouldn’t be used for the development or implementation of an investment strategy. This tool is created to explain basic financial / investment related concepts to investors. The tool is created for helping the investor take an informed investment decision and is not an investment process in itself. Bajaj Finserv AMC has tied up with AdvisorKhoj for integrating the calculator to the website. Mutual Fund does not provide guaranteed returns. Also, there is no assurance about the accuracy of the calculator. Past performance may or may not be sustained in future, and the same may not provide a basis for comparison with other investments. Investors are advised to seek professional advice from financial, tax and legal advisor before investing in mutual funds.
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Bajaj Finserv Limited, an unregistered Core Investment Company (CIC) under RBI Regulations 2020, is a part of the renowned Bajaj Group.
One of India’s leading and most diversified financial services institutions, Bajaj Finserv Ltd provides simple financial solutions to crores of people every day through its group companies. Through continuous innovation, it strives to enrich the lives of communities across the length and breadth of the country and make financial security accessible to all.
Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
