IISL launches Nifty index to track SDL securities market

NIFTY 10 Year SDL Index, contains SDLs issued by top 14 states, selected every year based on their primary issuance volume during previous year.

The index captures the total return, including price return and coupon return, on the underlying SDL portfolio.

As per IISL the index will cater to the benchmarking needs of asset managers for their investments in SDLs and would also be available for licensing for launch of structured products and passive financial products like exchange traded funds (ETFs) and index funds.

"The NIFTY 10 Year SDL index, with its unique construction methodology, aims to represent this evolving segment of the Indian fixed income securities market," IISL CEO Mukesh Agarwal said in a statement.

According to IISL, with increasing level of state borrowings, issuances of SDLs have almost doubled from Rs 1.97 trillion in 2013-14 to Rs 3.88 trillion in 2016-17.

The 10 year continues to be the most popular maturity segment with about 96 per cent share of SDL primary issuance volume, it said in a release here.

Besides, within mutual funds, gilt funds investment in SDLs, as a per cent of their fund AUM, has increased from 6 per cent to 15 per cent in the previous 3 financial years.

The base date for the index is September 3, 2001 and base value is 1,000 and the list of 14 states in the index would be reviewed annually.