REITs, InvITs to be part of Nifty Indices

Last Updated25/08/2021

As per new eligibility criteria announced by NSE, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) can now be included in the Nifty indices.
The changes will be effective September 30, 2021.
At present, only equity shares could be part of Nifty indices but not REITs and InvITs.

NSE also announced the semi-annual review of indices.
NSE also revised the criteria for the Nifty Pharma, expanding the index.
Now, the top 20 stocks based on the six-month average free-float market cap that is eligible for NSE F&O trading will be included in the index.
A maximum of 20 stocks can remain in the pharma index.

A REIT is a kind of real estate mutual fund, which facilitates investments into the real estate sector.
While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets.
It is regulated by the Securities and Exchange Board of India (SEBI).
REITs are usually commercial properties that are already generating rental income.
80% of the value of a REIT should be invested in completed and rent-generating properties, ensuring visibility in returns for investors.
The minimum subscription limit for REITs was brought down to Rs50,000, from the earlier Rs2 lakh.

Infrastructure investment trusts are investment instruments that work like mutual funds.
It is regulated by the Securities and Exchange Board of India.
The objective of InvITs is to promote the infrastructure sector of India by encouraging more individuals to invest in it.
The purpose of InvITs is to enable Infrastructure Companies to repay their debt obligation quickly and effectively.
The minimum subscription limit for InvITs was reduced from ₹10 lakh to ₹1 lakh.

It allows investment in revenue-generating finished projects and tends to invite investors through a public offering.

It allows investing in projects that are under construction or have been finished.