The National Stock Exchange has announced that Real Estate Investment Trusts (REITs) will be eligible for inclusion in Nifty equity indices from the next scheduled rebalancing. According to reports from Business Standard, this decision follows the Securities and Exchange Board of India's (SEBI) circular reclassifying REITs as equity-related instruments. The reclassification is specifically aimed at facilitating greater participation by mutual funds and Specialized Investment Funds (SIFs). As per NSE Indices Limited, the amendment has enabled the formal entry of REITs into Indian equity indices and increased the possibility of exposure to REITs for index-linked funds and institutional investors.
Under the previous framework, REITs were not considered eligible for inclusion in any Nifty equity index. As reported by Business Standard, the revised eligibility criteria will come into effect from the upcoming scheduled reconstitution of the respective Nifty equity indices. The Index Maintenance Sub-Committee (Equity) of NSE Indices has approved this revision to the inclusion framework. According to NSE Indices Limited, these changes will take effect from the next scheduled reconstitution of the respective indices, with the specific REITs eligible to be determined on that date.
This regulatory change represents a significant shift in how REITs are treated within India's equity market indices. According to the report, the decision will allow REITs to be included in Nifty equity indices for the first time, expanding the scope of equity-related instruments that can be included in these benchmark indices. The change is expected to enhance the participation of REITs in mutual fund and SIF portfolios through improved index inclusion. As per NSE Indices Limited, this broadly strengthens the acceptance of REITs in the capital market, especially at a time when regulatory classification directly affects product access and fund participation. These changes will have a direct impact on investors tracking index funds, ETFs, and derivative products that follow Nifty indices.
