“Can investors pursue financial goals without compromising their personal values?”
For decades, the answer was largely left to individual discretion. Investors could avoid certain companies if they wished, but doing so often meant building customised portfolios as the only option.
The emergence of these indices offers a rules-based way to implement such preferences.
In July 2026, India’s two leading stock exchanges—the NSE and the BSE—introduced the Nifty500 Ahimsa Index and the BSE 500 Saatvik Index, respectively. While India has seen thematic, sectoral and ESG indices before, these benchmarks apply a different approach to index construction: they are built around an ethical framework rather than an investment theme or financial factor.
The launch adds another approach to India’s expanding index landscape and raises a broader question about how personal values can influence investment decisions.
Investing Has Always Evolved
Passive investing has come a long way from simply tracking the largest companies.The first generation of index investing focused on broad market exposure through benchmarks like the Nifty 50 or Sensex. Over time, investors wanted more choice. Exchanges responded with indices based on sectors, dividends, quality, momentum, low volatility, equal weighting and ESG principles.
Today, India has well over 400 indices across the NSE and BSE ecosystem, catering to different investment objectives and market segments. The Ahimsa indices add another dimension to this expanding index landscape. Instead of asking “Which companies are likely to generate better returns?“, these indices ask another question: “Which companies are consistent with a particular set of ethical values?“
That subtle shift changes the philosophy of index construction.
What Exactly Are the Ahimsa Indices?
Both indices begin with a broad universe of India’s largest listed companies. From there, companies involved in businesses considered inconsistent with the principle of Ahimsa—or non-violence—are excluded. The exclusion criteria include businesses associated with activities such as:
● Alcohol
● Tobacco
● Gambling
● Weapons and defence equipment
● Meat processing
● Animal slaughter
● Leather manufacturing
● Certain forms of animal testing
The remaining companies are then weighted using conventional free-float market capitalisation methodology, making the investment process largely passive after the ethical screening is completed. This is important.
The indices are not attempting to identify the “best” companies. Instead, they aim to identify companies that satisfy a predefined ethical framework.
How Ahimsa Differs from ESG
At first glance, many investors may assume the Ahimsa indices are simply another version of ESG investing. They’re not. ESG evaluates how companies conduct their business.
Questions typically include:
● Does the company have strong governance?
● Does it manage environmental risks?
● How does it treat employees?
● Does it disclose sustainability information?
A company producing alcoholic beverages could still receive a strong ESG rating if it demonstrates responsible governance and sustainability practices. Ahimsa investing follows a different philosophy. It evaluates what the company does, not just how responsibly it does it.
If a business falls within certain excluded industries, it may be removed regardless of how well it performs on governance or environmental parameters. That distinction makes these indices more values-driven than sustainability-driven.
Values-Based Investing in a Global Context
While these indices are new to India, values-based investing has existed internationally for decades. Faith-based investment products have become established across several markets.
Examples include:
● Sharia-compliant equity indices
● Catholic investment funds
● Christian value-based portfolios
● Vegan and animal welfare ETFs
● Fossil-fuel-free investment strategies
According to the US SIF Foundation, sustainable and values-based investment strategies account for trillions of dollars in professionally managed assets globally, demonstrating that investors in several markets have sought to align portfolios with personal beliefs alongside financial objectives. India’s Ahimsa indices bring this global trend into the domestic market in an Indian context.
What Could This Mean for Investors?
The immediate impact may not be visible. Indices by themselves cannot be invested in. However, indices often become the foundation for financial products. Historically, benchmark launches have been followed by:
● Index funds
● ETFs
● Structured products
● Portfolio management strategies
● Model portfolios
If fund houses decide to launch products tracking these indices, investors who prefer ethical screening could implement these exclusions through diversified investment products without having to construct portfolios themselves. For financial advisors, it introduces another portfolio-construction option for clients whose investment decisions are influenced by personal beliefs as much as financial goals.
The Trade-Off Investors Should Understand
Every investment philosophy involves trade-offs. By excluding entire industries, the Ahimsa indices inevitably alter sector allocations compared with broader market benchmarks. This can create periods of outperformance as well as underperformance depending on market cycles.
For example:
● If excluded sectors outperform, the index could lag the broader market.
● If excluded sectors struggle, the index may perform relatively better.
In other words, ethical screening introduces an additional investment characteristic that may influence performance over time. Investors should therefore view these indices as an alternative way of constructing a diversified portfolio, not as a strategy designed to consistently outperform traditional benchmarks.
Could This Influence Corporate Behaviour?
A separate question is whether these indices could influence corporate behaviour over time. As passive investing grows, inclusion in major indices increasingly matters for companies.
Index inclusion can influence:
● Institutional ownership
● ETF inflows
● Liquidity
● Market visibility
If values-based indices gain meaningful investor participation over time, companies may need to consider how business activities that affect index eligibility influence their inclusion in such benchmarks. While it would be premature to expect immediate behavioural changes, the emergence of such benchmarks broadens the conversation around how investors may incorporate personal values into capital-allocation decisions.
The relevant question for investors is therefore not whether values-based investing is inherently better or worse, but whether the exclusions are consistent with their personal values and whether the resulting portfolio remains appropriate for their objectives, risk tolerance and diversification needs.