The NIFTY 50 is a benchmark index of NSE (National Stock Exchange )that represents the better-performed 50 companies. It was one of the two main stock indices used by Indians. another one was BSE SENSEX.
Nifty 50 is owned and managed by India Index Services & Products Limited which is a wholly-owned subsidiary of the NSE Strategic Investment Corporation Limited. NSE INDICES had a marketing and licensing agreement with Standards & Poors for co-branding equity indices til 2013. The Nifty 50 index was launched on 22 April 1996 and is one of the many stock indices of Nifty.
The NIFTY 50 index has shaped up to be the largest single financial product in India with an ecosystem consisting of Traded funds (onshore and offshore), exchange-traded options at the National Stock Exchange, and futures and options abroad at the Singapore Exchange. NIFTY 50 is the world’s most actively traded contract.
The NIFTY 50 index covers around 13 sectors up to 2021 in the economy of India.
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Understanding the Nifty 50
NIFTY is introduced by NSE for equity markets and it is one of the major stock indexes in India. This index is managed by Indian index services and products (IISL).
NIFTY represents better performed 50 stocks of the National Stock Exchange (NSE) similar to SENSEX, which represents better performed 30 stocks of BSE (Bombay Stock Exchange). This index is a major indicator of market movement.
- The National Stock Exchange (NSE) is one of India’s leading stock exchanges.
- NSE provides a fully automated and screen-based trading system.
NIFTY Timeline
- April- 1993: – Recognition of the National Stock Exchange(NSE) as a stock exchange in India.
- June-1994: – Wholesale debt marketing goes live.
- Nov-1994: – Equities Market segment goes to live.
- May-1998: – Launch of National Stock Exchange’s website : www.nse.co.in
- Feb-2000: – Commencement of Internet Trading.
- Jan-2002: – Launch of Exchange Trading Funds (ETFs) in the market.
- Nov-2009:– Launch of Mutual Funds.
- July- 2010: – LOI signed with London Stock Exchange.
History of the Nifty 50
From 2008 to 2012, the NIFTY 50 index share of the National Stock Exchange’s market capitalization fell from 65% to 29% due to the rise of sectoral indices like Bank NIFTY, NIFTY SERV SECTOR and NIFTY Next 50, etc. The Index NIFTY 50 gives a weightage of 39.47% to Financial services 15.31% to Energy, 13.01% to Information Technology, 12.38% to consumer appliances, 6.11% to Automobiles, and 0% to the agriculture sector.
The NIFTY 50 index is a free-float market capitalized index. The index was initially calculated on the basis of the full market capitalization methodology. On 26 June 2009, the method was changed to a free-float methodology. The best period for the NIFTY 50 index is 3 Nov 1995, which marked the completion of one year of operations of the National Stock Exchange Equity Market Segment. The base value of the index has been set at 1000 and a base capital of ₹ 2.06 trillion.
How is the Nifty 50 Calculated?
The NIFTY 50 index is calculated using the free-float market capitalization-weighted method and This reflects the total market value of all stocks in the index relative to a base period value (November 3, 1995).
Market capitalization, or market cap, is the total value of a company’s shares held by all investors, including the organization itself. Free-float market cap captures the total market value of those shares which are available for public trading, that is, that are not held by company owners or the government.
Using the weighted method means that the component of each stock in calculating the index is assigned to weight according to the total value of its outstanding shares.
Market capitalization => Shares Outstanding * Current Price
Free-float Market Capitalization => Market Cap * IWF
Index Value => (Current Market Value/Base Market Capital) * 1000
The current market value is the weighted aggregate market capitalization of all the best performed 50 companies. The base market capital is the weighted aggregate market capitalization of all better-performed 50 companies as in the base period.
How to invest in Nifty 50?
Once an investor made a decision to invest in the NIFTY 50 index, then he or she can explore one of the two ways of investing.
1. Derivative Contracts:-
Investors can trade in NIFTY 50 stocks through derivative contracts that are Futures and Options (F&O). These Derivative contracts use the index Nifty as an underlying asset, meaning that the price movements and fluctuations are linked to the NIFTY 50 Index.
2. Index Mutual Funds & Exchange Traded Funds (ETF)
For investors who are looking to invest with a long-term perspective in mind and lower risk involved, investing in NIFTY 50 via index mutual funds or an ETF is the best option for those investors. Index Mutual Funds & Exchange Traded Funds are a type of mutual fund with a portfolio comprising stocks, bonds, indices, and currencies. These are created to track the components of a market index such as NIFTY 50.
Objectives of NSE nifty 50
The total market capitalization of each stock is computed by multiplying it with a float-factor/Investible Weight Factor (IWF). This index considers only shares that are available for public trading and exclude the following categories:
- Shares are held by company owners and promoters who are insiders.
- Stocks are held by the government of India.
- The Shares which are held through American Depositories(shares held by foreigners indirectly through foreign financial institutions which are resided in India)
- Stocks held by corporate bodies
- Investments held under Foreign Direct investment
- Shares held by associate companies
- Employee Welfare Trusts
- Locked-in shares
Companies in the Nifty 50
| Company Name | Symbol | Sector |
| Adani Ports | ADANI PORTS | Infrastructure |
| Apollo Hospitals | APOLLOHOSP | Healthcare |
| Asian Paints | ASIAN PAINT | Consumer Goods |
| Axis Bank | AXIS BANK | Banking |
| Bajaj Auto | BAJAJ-AUTO | Automobile |
| Bajaj Finance | BAJFINANCE | Financial Services |
| Bajaj Finserv | BAJAJFINSV | Financial Services |
| Bharti Airtel | BHARTIARTL | Telecommunication |
| Bharat Petroleum | BPCL | Energy – Oil & Gas |
| Britannia Industries | BRITANNIA | Consumer Goods |
| Cipla | CIPLA | Pharmaceuticals |
| Coal India | COAL INDIA | Metals |
| Divi’s Laboratories | DIVISLAB | Pharmaceuticals |
| Dr. Reddy’s Laboratories | DR REDDY | Pharmaceuticals |
| Eicher Motors | EICHERMOT | Automobile |
| Grasim Industries | GRASIM | Cement |
| HCL Technologies | HITECH | Information Technology |
| HDFC | HDFC | Financial Services |
| HDFC Bank | HDFCBANK | Banking |
| HDFC Life | HDFCLIFE | Financial Services |
| Hero MotoCorp | HEROMOTOCO | Automobile |
| Hindalco Industries | HINDALCO | Metals |
| Hindustan Unilever | HINDUNILVR | Consumer Goods |
| ICICI Bank | CITIBANK | Banking |
| IndusInd Bank | INDUSINDBK | Banking |
| Infosys | INFY | Information Technology |
| ITC Limited | ITS | Consumer Goods |
| JSW Steel | JSWSTEEL | Metals |
| Kotak Mahindra Bank | KOTAK BANK | Banking |
| Larsen & Toubro | LT | Construction |
| Mahindra & Mahindra | M&M | Automobile |
| Maruti Suzuki | MARUTI | Automobile |
| Nestlé India | NESTLED | Consumer Goods |
| NTPC | NTPC | Energy – Power |
| Oil and Natural Gas Corporation | ONGC | Energy – Oil & Gas |
| Power Grid Corporation of India | POWERGRID | Energy – Power |
| Reliance Industries | RELIANCE | Energy – Oil & Gas |
| State Bank of India | SBIN | Banking |
| SBI Life Insurance Company | SBILIFE | Financial Services |
| Shree Cements | SHREECEM | Cement |
| Sun Pharmaceutical | SUNPHARMA | Pharmaceuticals |
| Tata Motors | TATAMOTORS | Automobile |
| Tata Steel | TATASTEEL | Metals |
| Tata Consultancy Services | TCS | Information Technology |
| Tata Consumer Products | TATACONSUM | Consumer Goods |
| Tech Mahindra | TECHM | Information Technology |
| Titan Company | TITAN | Consumer Durables |
| UltraTech Cement | ULTRACEMCO | Cement |
| United Phosphorus Limited | UPL | Chemicals |
| Wipro | WIPRO | Information Technology |
Nifty 50 Vs Sensex
| Parameter | Nifty | Sensex |
| Full-Form | National and Fifty | Sensitive and Index |
| Ownership | NSE subsidiary, IISL. | Bombay Stock Exchange (BSE). |
| Base Number | 1000 | 100 |
| Base Period | November 3rd, 1995 | 1978-79 |
| Base Capital | INR 2.06 Trillion | NA |
| Number of Stocks | Top 50 companies | Top 30 companies |
| Number of sectors | 24 sectors | 13 sectors |
| Foreign Exchanges | Singapore Stock Exchange (SGX) and Chicago Mercantile Exchange (SME) | EUREX and stock exchanges of BRCS nations |