BSE Launches Two New G-Sec Indices - What Investors Should Know?

BSE Index Services Pvt Ltd has introduced two new BSE G-Sec Indices– the BSE 4-8 Year G-Sec Index and the BSE 8-13 Year G-Sec Index. Launched on February 11, 2026, these indices provide new avenues for passive fixed-income investing in India and further deepen benchmarking of the debt markets.  

For investors looking for safe, predictable returns and enhanced diversification of their portfolios, these new government securities index products are revolutionary. They cover previously unaddressed areas of the maturity spectrum, providing simplicity and precision that the G-Sec investment strategy has never had before.  

This detailed guide will explain the new indices, their workings, benefits, and practical suggestions on how to add them to your fixed income investing strategy.  

Importance of Government Securities (G-Secs)

Government Securities (G-Secs) are issued debt instruments by the Government of India via the Reserve Bank of India (RBI). Investors are guaranteed no risk of default given the government’s backing. Investors receive regular coupon (interest) payments and the principal amount is returned upon maturity.

G-Secs are used by banks, insurance companies, mutual funds, and individual investors for:

- Preserving capital.

- Managing liquidity.

- Hedging against interest rates.

- Complying with regulatory obligations (e.g., SLR for banks).

 

 

A government securities index measures the performance of various bonds, providing investors with a single value that indicates average market performance. India previously had few options investors could choose from based on the bonds’ maturity. BSE G-Sec indices are the new, first of their kind indices.

BSE G-Sec Indices

Both indices were launched with:

- Base value: 100

- First value date: August 31, 2015 (Data is Back-tested).

- Reconstitution: Monthly

- Weighting: Turnover + Outstanding Amount

- Constituents: Top 3 most liquid G-Secs in the bucket with outstanding issuance > ₹7,500 crore.

- Universe: Fixed coupon, plain vanilla G-Secs only.

BSE 4-8 Year G-Sec Index

Objective: Measures the 3 most liquid G-Secs that have a residual maturity of 4 to 8 years.

As of January 30, 2026 (most recent data available):

- Price Return Index: 107.39

- Total Return Index: 219.76

- Annualized Total Returns:

-   1 Year: 7.08%

-   3 Years: 8.04%

-   5 Years: 6.13%

-   10 Years: 7.73%

Current Constituents (weights as of Jan 30, 2026):

 1. 7.18% GS 2033 (41.42%)

 2. 7.26% GS 2033 (31.14%)

 3. 6.01% GS 2030 (27.44%)

This index is designed for investors who are looking for the duration to be moderate (5-6 years) but want good yields and less sensitivity to interest rates than bonds of longer durations.

BSE 8-13 Year G-Sec Index

Objective: Tracks the 3 most liquid G-Secs with residual maturity between 8 and 13 years.

As of January 30 2026:

- Price Return Index: 100.99

- Total Return Index: 205.57

- Annualized Total Returns:

- 1 Year: 6.22%

- 3 Years: 8.18%

- 5 Years: 5.68%

- 10 Years: 7.09%

Current Constituents:

 1. 6.48% GS 2035 (56.65%)

 2. 6.33% GS 2035 (23.78%)

 3. 6.79% GS 2034 (19.57%)

This is a duration (around 9-10 years) that offers higher sensitivity to interest rate changes and potentially higher returns in a falling rate environment.

 

 

How Do These Differ from Existing BSE Bond Indices?

BSE has the BSE India 10 Year Sovereign Bond Index (known in the context of BSE bond index products). That focuses narrowly on a ~10-year paper.

The new BSE G-Sec indices offer the following:

- Clear maturity segmentation (4-8 and 8-13 years).

- A focus on the most liquid securities for better tradability.

- Monthly reconstitution to reflect current market liquidity.

- More options for benchmarks for funds and PMS.

In combination, they offer a more complete toolkit for fixed income investing across the yield curve.

Why Investors Should Care: Key Benefits

1. Precision in Duration Management 

It’s possible to align exactly with your investment horizon. 5 years?  Go 4-8. 10 years?  Go 8-13.

2. Passive Investing Made Easy 

Indices are meant for ETFs, Index Funds, and PMS benchmarking. New ways to gain low-cost exposure and without the hassle of buying individual bonds will be available soon.

3. Enhanced Liquidity & Transparency 

Only the top 3 most liquid securities lead to tighter bid-ask spreads and more ease for entry and exit.

4. Within Safety, Diversification 

Sovereign risk and a range of G-Secs provide a greater level of diversification and reduced concentration risk. Compared to holdings in a single bond, the level of risk is reduced.

5. Enhanced Benchmarking

Portfolio managers now have a better option for assessing their performance. They can now use relevant benchmarks instead of a generic 10-year index. 

Practical G-Sec Investment Strategy Using the New Indices

Investors can adopt the BSE G-Sec indicesfor their fixed income investingstrategies as follows: 

Strategy 1: Barbell or Bullet Approach

- 4-8 Year Index (shorter duration for liquidity): 40% allocation.

- 8-13 Year Index (higher yield potential): 40% allocation.

- 20% to overnight/liquid funds.

Strategy 2: Duration Matching for Goals.

If you intend to make a house down payment within the next 6 years, you should invest a lot in the BSE 4-8 Year G-Sec Index. For a retirement corpus that is expected to grow in 10 years or more, invest in the BSE 8-13 Year Index. 

Strategy 3: Active-Passive Hybrid

- For core holding (70-80%), consider index-tracking ETFs. 

- For the remaining portion, mix in tactical exposure to high-yield state development loans or corporate bonds.

Strategy 4: Laddering with Indices

Instead of manually rolling individual bonds, invest in both indices and let monthly reconstitution handle rebalancing.

Pro Tip: In a falling interest-rate cycle (RBI easing), the longer-duration 8-13 Year Index usually outperforms. In rising-rate scenarios, the shorter 4-8 Year Index protects capital better.

Things You Should Consider

Bond prices fall when interest rates rise. This is called interest rate risk (8-13 years are worse). 

Reinvestment risk refers to coupons that can be reinvested at lower rates.

Choosing highly liquid top securities reduces liquidity risk, but cannot fully eliminate it.

Opportunity cost applies here: G-Secs in India are currently offering 6.5-7.2% yields. This is lower than what corporate bonds or debt funds could give (but with additional credit risk). 

Investment Options Today

While dedicated ETFs are yet to launch, you can gain limited exposure via:

1. Direct G-Secs through RBI Retail Direct or stock exchanges.

2. G-Sec mutual funds/ETFs with similar maturities.

3. Portfolio Management Services (PMS) with these new indices as benchmarks.

4. Index funds/ETFs expected to be launched (AMCs like HDFC, ICICI Prudential, Nippon India will announce).

In addition, Retail Direct users can buy the bonds themselves. This allows them to manually replicate the index.

The Larger System of Fixed Income Investing in India

G-Secs are the safest option in India’s rapidly growing debt market for the sake of fiscal deficit control, the RBI’s targeting of inflation, and enhanced participation from institutions.

The introduction of two new indices for Government Securities (G-Secs) by the Bombay Stock Exchange (BSE) shows the BSE's determination to innovate and improve access to the fixed-income investing marketplace for both retail and passive investors. BSE intends to improve the areas of transparency and investability for passive investors by offering new indices for G-Secs.

G-Secs are particularly advantageous for those who are high-net-worth individuals (HNWIs) looking to invest and minimise their tax liabilities. G-Secs are tax-efficient and offer indexed capital gains. Therefore, everyone from young wealth builders to retirees can benefit from adding G-Secs to their G-Sec investment strategy.

 

 

Conclusion

The introduction of the BSE 4-8 Year G-Sec Index and BSE 8-13 Year G-Sec Index provides investors with building blocks that encourage flexibility, liquidity, and low-cost investing (when ETFs are launched) in Government Securities. These indices will help investors align their debt investment with their life goals.

Prior to the release of these indices, flexibility and liquidity were not available for investors to manage their portfolios by buying and selling Government securities. You will want to review the duration of your investments in your portfolio to ensure that there is not an unnecessary concentration in one area. These new indices are an excellent opportunity to ensure that your portfolio goals align with your investment duration.

The new passive strategy for investing in government securities is no longer a concept; the BSE has made it a reality. Soon the new ETFs will become available, and the sophisticated strategy will be fully complete.

DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.