How Concentrated Are Indian Equity Indices? A Coverage-Aware Framework for Measuring HHI, Top-N, Effective-N, and Sector Concentration

<div> This paper develops a public-source, coverage-aware framework for measuring concentration in major Indian equity indices. The study uses current constituent and sector weightage data for Nifty 50, Nifty Next 50, Nifty 100, Nifty 500, Nifty Bank, Nifty IT, Nifty FMCG, Nifty Auto, and BSE Sensex. The central methodological contribution is not merely the calculation of Herfindahl-Hirschman Index (HHI), Top-N concentration ratios, effective number of stocks, Shannon entropy, Theil concentration, and sector HHI; it is the explicit separation of full-constituent snapshots from top-10-only snapshots and sector-level snapshots. This distinction is essential because several official public factsheets disclose only the ten largest constituent weights while providing complete sector breakdowns. </div> <div> <br> </div> <div> The current-snapshot evidence indicates that nominal index breadth can materially overstate economic diversification. Broad indices display lower concentration than sectoral indices, but concentration remains economically meaningful: the Nifty 50 top ten constituents account for 53.68% of index weight, while the BSE Sensex top ten account for 65.28% using full-constituent BSE weightage data. Sectoral indices are substantially more concentrated, with Nifty IT, Nifty FMCG, Nifty Auto, and Nifty Bank displaying top-10 weights near or above 86%. </div> <div> <br> </div> <div> The paper contributes a reproducible data structure and research workflow that can be extended to historical snapshots, risk-linkage tests, and policy analysis under the SEBI Significant Indices framework. The findings are best interpreted as current-snapshot evidence and a transparent foundation for future concentration-drift analysis rather than as a final causal claim about index risk. </div>