Nifty CPSE Index
The Nifty CPSE Index is a specialised index comprising Central Public Sector Enterprises (CPSEs) selected by the Department of Investment and Public Asset Management (DIPAM) to facilitate the government's disinvestment programme through the CPSE ETF.
The Nifty CPSE Index was specifically designed to underpin the Government of India's CPSE ETF (Central Public Sector Enterprises Exchange Traded Fund), one of the largest and most widely subscribed ETF products in India. It was constructed in consultation with DIPAM (formerly DEPB) and NSE Indices to include prominent CPSEs across strategic sectors such as oil and gas, power, metals, and engineering.
The index was launched alongside the CPSE ETF in 2014, a landmark initiative through which the government sold stake in state-owned enterprises to retail and institutional investors without going through the traditional block deal or OFS route. The CPSE ETF became one of the most successful government disinvestment vehicles, raising tens of thousands of crores across multiple follow-on fund offers (FFOs). Employee-specific tranches and retirement fund allocations made the product accessible to a broad base of investors.
The composition of the Nifty CPSE Index is periodically reviewed. It includes companies such as ONGC, NTPC, Coal India, BHEL, Oil India, Power Finance Corporation, REC, GAIL, and others depending on the review. Because the index is designed for disinvestment purposes, it tends to include CPSEs where the government retains majority ownership and seeks to monetise a portion of its stake.
From an investment perspective, the Nifty CPSE Index and the ETF tracking it offer a low-cost way for investors to gain diversified exposure to government-owned enterprises. The government occasionally offers CPSE ETF units at a discount to NAV during FFOs, which has historically provided short-term arbitrage opportunities.
A critical consideration is that the index is subject to policy risk — changes in government disinvestment strategy, energy pricing policy, or capital allocation mandates to CPSEs can significantly affect the index performance. Between 2022 and 2024, strong earnings recovery and capital expenditure tailwinds saw CPSE stocks and the related ETF deliver strong absolute returns, prompting broader interest in PSU-themed investing.