Investing in the markets can be tricky in the best of times. More so in the past 12-15 months when domestic equities have been quite volatile. While US trade tariffs and geopolitical tensions still lurk in the background, there is some semblance of order returning on these fronts with negotiations and peace talks in place. AI-related business and job disruption continue present some challenges.
At the other end, domestic cues have picked up pace in the past couple of quarters after nearly one year of lull as GDP growth comes back, GST and income tax cuts revive consumption, and inflation and interest rates remain moderate.
However, the lack of valuation comfort in the broader markets is cause for concern. In this regard, large caps continue to be reasonably valued and trade at a significant discount to mid and small caps.
One index that investors may find attractive is the Nifty Top 15 Equal Weight, as it gives exposure to the best of bluechips.
Why large caps now?
The Nifty 100 traded at a PE (price earnings) multiple of 22.29 and a PB (price to book) ratio of 3.54 as of October 31, 2025 according to data from the NSE. In comparison, the Nifty Midcap 150 traded at a PE multiple of 34.12 and PB ratio of 4.4, while the Nifty Small Cap 250 is available at a PE of 30.76 and PB of 3.68.
From a longer term perspective the weightage of large caps in the Nifty 500 has reduced significantly. In January 2015, large caps made up nearly 78% of the Nifty 500. This proportion has fallen to around 69% as of October 2025.
This historic lower representation in the broader market index gives space for a catch-up in the future.
From a more fundamental perspective, large caps are better-placed to weather the challenges due to trade tariffs, supply chain disruptions, a global slowdown, geopolitical and other macro challenges. These firms tend to have steady earnings and healthy cashflows, making them resilient.
The best of bluechips
For investors seeking large cap investments, the Nifty Top 15 Equal Weight Index offers a robust option for the long term. The index is constructed with the top 15 stocks from the Nifty 50 benchmark. These top 15 stocks are selected based on the 6-month average free-float market capitalisation of the Nifty 50 stocks. Only stocks in the Nifty 50 are eligible for the index.
Under the equal-weight index methodology, each stock in the index is assigned the same weight, irrespective of its free-float market capitalisation. This ensures that every constituent contributes equally to the index’s performance. For instance, in the Nifty Top 15 Equal Weight Index, each of the 15 stocks carries a weight of roughly 6.6% to 7%. The index is reconstituted every six months and rebalanced quarterly, which means that even if a particular stock experiences a sharp rally during the period, its weight will be brought back to the original equal-weight level at the time of rebalancing.
Key Advantages of an Equal Weight Index
- No single stock can disproportionately influence the index movement, as all stocks receive similar representation
- Smaller companies have the same impact on index performance as larger companies, allowing for broader market exposure
- The index typically delivers a higher dividend yield because funds are allocated equally across its components
- Lower concentration risk helps provide greater stability to the overall portfolio
- The structure often offers better downside protection during market declines
Coming to sector representation, as many as seven sectors are included in the Nifty Top 15 Equal Weight Index making it well diversified. The top five sectors of the index are Financial Services at 40.2%, followed by IT at 13.1%, FMCG at 13.0%, Automobile & Auto Components at 12.8%, and Construction at 7.1%. (Data as of October 31, 2025)
Valuation Comfort
The Nifty Top 15 Equal Weight trades at a lower valuation that many other indices. Also, the volatility (1-year) associated with the index (measured by standard deviation) is lower than other benchmarks.
For retail investors, taking the exchange traded fund (ETF) route would be ideal as units are traded actively in the exchanges. The costs are low and exposure to a dynamically managed index becomes possible.
Investors without demat/trading accounts can buy the index fund tracking the Nifty Top 15 Equal Weight Index.
- Chintan Haria, Principal – Investment Strategy, ICICI Prudential Mutual Fund