"NSE Ahimsa Index raises debate on ethical versus financial investing"
Negative Screening
excluding companies or sectors that fail to meet defined ethical or values-based criteria from an investment universe.
Efficient Frontier
the set of optimal portfolios offering the highest expected return for a given level of risk, per Modern Portfolio Theory.
India's capital markets have progressively moved beyond purely return-driven frameworks to incorporate non-financial criteria into investment decisions. Globally, this shift was institutionalised through the UN Principles for Responsible Investment (UN PRI), which encouraged institutional investors to embed ESG (Environmental, Social, and Governance) factors into portfolio construction. In India, SEBI (Securities and Exchange Board of India) has been the primary regulatory driver, mandating Business Responsibility and Sustainability Reporting (BRSR) for the top 1,000 listed companies by market capitalisation — a significant step toward standardised non-financial disclosure.
Thematic indices — rules-based baskets of stocks built around a defined investment philosophy rather than broad market representation — have become the primary vehicle for channelling this shift into investable products. The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) have both expanded their thematic offerings, covering ESG, sustainability, sectoral, and now values-based screens. India already hosts the Nifty100 ESG, Nifty100 Enhanced ESG, Nifty100 ESG Sector Leaders, and Nifty50 Shariah indices, situating the Ahimsa Index within a growing domestic ecosystem of non-conventional benchmarks.
The philosophical underpinning of this evolution traces back to a centuries-old debate in economics. Conventional financial theory posits Homo Oeconomicus — a purely rational, wealth-maximising agent. An alternative tradition, rooted in Adam Smith's The Theory of Moral Sentiments, recognises that human behaviour is also shaped by sympathy, justice, and moral concern. Behavioural and ethical finance has formalised this as Homo Ethicus — an agent who derives utility from both economic gains and value-aligned investing.
A thematic index is a rules-based benchmark that selects or excludes stocks based on a defined theme or philosophy. It serves two functions: as a performance benchmark for active fund managers, and as the underlying universe for passive products such as Exchange-Traded Funds (ETFs) and index mutual funds. The Nifty 500 Ahimsa Index, launched by the NSE in collaboration with the Ahimsagain Foundation, applies a negative-screening or exclusionary approach — removing companies classified in the Foundation's "orange" and "red" bands, which include businesses engaged in animal cruelty, sin goods, and related activities. The remaining 326 companies from the Nifty 500 universe are weighted by free-float market capitalisation, making it a diversified, passive-investment-ready benchmark.
This distinguishes the Ahimsa Index from mainstream ESG indices, which use a best-in-class or positive-screening methodology — selecting the highest ESG scorers within each sector rather than excluding entire industries. The Ahimsa Index's approach more closely resembles Socially Responsible Investing (SRI) and faith-based investing (such as the Nifty50 Shariah), where certain industries are excluded categorically, irrespective of individual firm performance. …
With reference to investments, consider the following:
I.Bonds
II.Hedge Funds
III.Stocks
IV.Venture Capital
How many of the above are treated as Alternative Investment Funds?
Consider the following statements:
1.In India, Non-Banking Financial Companies can avail the Liquidity Adjustment Facility window of the Reserve Bank of India.
2.In India, Foreign Institutional Investors can be holders of the Government Securities (G-Secs).
3.In India, Stock Exchanges can provide a separate trading platform for debts.
Which of the statements given above is/are correct?
Which of the following best describes the difference between ESG investing and Socially Responsible Investing (SRI)?
According to Harry Markowitz's Modern Portfolio Theory, what is the consequence of restricting an investor's investment universe through ethical or values-based exclusions?
With reference to India's sustainable finance regulatory framework, consider the following statements:
1.SEBI has made Business Responsibility and Sustainability Reporting (BRSR) mandatory for the top 1,000 listed companies by market capitalisation.
2.The Nifty50 Shariah Index is an example of a faith-based thematic index already existing in India before the Ahimsa Index.
3.The UN Principles for Responsible Investment (UN PRI) is administered by SEBI as part of India's ESG disclosure framework.
Which of the statements given above is/are correct?
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