Indices do more than measure performance - they tell stories.
They offer us signals about what’s working, where value is being created, and why. While benchmark indices like the Nifty 50 reflect the broader economy, thematic indices offer sharper insights into emerging segments, often ahead of the curve. They help investors, operators, and policymakers spot patterns, validate theses, and shift strategies. And in doing so, they shape investment behavior and capital allocation.
Two indices - the EHI Index and the Nifty Rural Index - provide a valuable lens into India’s rural and semi-urban economy. Both serve as relevant proxies: the Nifty Rural Index has been viewed as a benchmark for rural market performance, while the EHI Index captures companies serving Entrepreneurial Households (EHs), the majority of whom reside in rural and semi-urban areas. This geographic overlap makes the comparison meaningful.
However, a closer look reveals a divergence in their performance. The difference likely stems from the nature of the companies tracked: specialist enterprises closely aligned with EH needs in the EHI Index, versus the more generalist companies in the Nifty Rural Index. Specialist companies are those that build or deeply customize products and solutions specifically for the Entrepreneurial Households, with their organizational DNA entirely focused on serving their unique needs. In contrast, generalist companies primarily focus on developing products and solutions for a broad market, and then subsequently make minor tweaks to these products or their distribution to cater to this segment.
Understanding the Indices
EHI Index:
The EHI Index tracks specialist companies that serve Entrepreneurial Households - resilient, aspirational households with multiple income streams, who actively invest in their own growth. Yet, these households remain underserved and have limited access to high-quality core solutions.
To be included in the index, companies must have a significant portion of their business - in terms of revenue, assets, or network - focused on these households, primarily in rural and semi-urban areas. They typically operate in sectors addressing core needs such as financial services, education, healthcare, and agriculture, which contribute to income generation or asset creation.
Eligible companies must also have a market capitalization above INR 10 billion and a history of institutional investment from venture capital or private equity firms.
Refer to this document for the detailed methodology.
Nifty Rural:
The Nifty Rural Index tracks generalist companies that sell into rural markets.
Inclusion criteria:
The Nifty Rural Index is built from the broader Nifty 500 universe. It selects the top 75 companies by free-float market capitalization across “rural‐theme” industries - including agriculture inputs, consumer staples, utilities, automobiles, telecom, and rural finance. Constituents are screened based on sector classification, not customer segment.
Sectoral lens:
Nifty Rural is diversified across sectors that drive rural demand. Its top sector weights (per the May 2025 factsheet) are Financial Services ~25%, FMCG ~20.3%, Automobiles & Auto Components ~17.9%, and Telecom ~10.8%, with smaller allocations in Power, Construction, Consumer Durables, etc.
Performance Comparison
Since its base date of January 2, 2017, the EHI Index has significantly outperformed:
- EHI Index return: 3.7x
- Nifty Rural Index return: 2.6x
This is not a coincidence. It’s the result of a deeper alignment between specialist companies and the evolving aspirations of India’s EH segment.
What sets them apart?
Target Market Focus:
EHI Index constituents are specialists. Their business models, product design, pricing, and distribution strategies are purpose-built for EHs. These are companies embedded in the economic lives of their customers.
The Nifty Rural Index companies, on the other hand, may only partially depend on rural markets and do not necessarily tailor their solutions for EHs.
Why this matters
The comparative performance of these indices suggest that specialist companies, those deeply aligned with Entrepreneurial Households, have performed better than their generalist counterparts.
The conventional view often sees these households as consumers of low-cost goods. But an emerging perspective recognizes them as powerful economic units - resilient, resourceful, and growth-oriented. Companies that understand this, and are purpose-built to serve their needs, are delivering stronger and more sustainable value creation.
This compelling evidence underscores a critical imperative: India needs more visionary entrepreneurs to build such specialist companies from the ground up, designed specifically to serve the nuanced needs of these dynamic Entrepreneurial Households. Equally vital is the role of discerning capital allocators, who must step forward to back these pioneering ventures. By fostering this ecosystem of focused innovation and strategic investment, we can collectively unlock the vast economic potential of Entrepreneurial Households, thereby building the next generation of India's blue-chip companies.