What is NIFTY 50?Nifty 50 is an Indian benchmark index. It represents the weighted average of 50 largest companies listed on the National Stock Exchange (NSE). The term Nifty 50 is a combination of National Stock Exchange and Fifty (50). Nifty 50 is also known as CNX Nifty. In simple terms, Nifty 50 is a collection or a basket of the 50 most active stocks on the NSE. Nifty 50 acts as a barometer for the overall movement of the stock market. Nifty 50 index is widely used by mutual fund companies as a benchmark to track the performance of actively managed mutual funds. Nifty 50 index was launched by the NSE on 22nd April 1996. It is owned and managed by Index and Services and Products Ltd (IISL). IISL is a wholly owned subsidiary of NSE Strategic investment Corporation Ltd. The total market capitalisation of the Nifty 50 companies is a staggering Rs 1,27,83,812 crores. Nifty 50 is one of the most actively traded contracts in the world. In 2021, Nifty 50 is in its 25th year. The below timeline shows Nifty 50’s major milestones in the last 25 years.
How is Nifty 50 Calculated?Originally Nifty 50 was calculated on full market capitalisation basis. But since 26th June 2009, Nifty 50 is calculated on free-float market capitalisation basis. This means that the stocks owned by promoters of these 50 companies is not included in calculating Nifty 50. This is because these stocks are not freely available for trading.
Things to note while calculating Nifty 50 Index• Base date for calculating Nifty 50 index is 3rd November 1995. • Base value of Nifty 50 index is 1,000 points. • Nifty 50’s base capital is considered as Rs 2.06 Trillion.
Formula for calculating NIFTY 50Let us now look at the 50 companies that make up the Nifty 50.
Composition of the Nifty 50 Index 2021The stocks in Nifty 50 index keeps on changing. In fact, there has been a visible yet gradual change in the composition of the Nifty 50 index. In 1995, financial services sector had 19.70% weightage in the index. This increased to 37.23% in 2021. Similarly, Information and Technology (IT) companies had no place in the index in 1995. But today, IT sector has the second highest weightage of 17.41% in Nifty 50. This change in the stocks of Nifty 50 reflects the change in India’s economy from manufacturing to service-based. The table below shows the change in composition of Nifty 50 index between 1995 to 2021.
|Nifty 50 Constituents||1995||Mar-09||Mar-14||Mar-19||Sep-21|
|Oil & Gas||0.00%||0.00%||0.00%||0.00%||12.30%|
|Information & Technology||0.00%||9.05%||16.34%||13.67%||17.41%|
|Cement & Cement Products||2.20%||1.90%||3.08%||1.62%||2.46%|
|Media & Entertainment||0.00%||0.00%||0.00%||0.53%||0.00%|
|Fertilisers & Pesticides||1.80%||0.00%||0.00%||0.75%||0.51%|
Sectoral Allocation of Nifty 50 Index 2021The stocks in Nifty 50 index is diversified across 13 sectors with the following allocation –
|Sector||Weightage in Nifty 50 Index|
|Information & Technology||17.41%|
|Oil & Gas||12.30%|
|Cement & Cement Products||2.46%|
|Fertilisers & Pesticides||0.51%|
Nifty 50 Companies List 2021 and Individual Stock Weightage 2021
|List of Nifty 50 Companies||Weightage in the Nifty 50 index||Market Capitalisation (Rs Cr)||52W High||52W Low||Return on Equity Ratio (%)||Price to Earnings Ratio||Debt to Equity Ratio||Price to Book Value Ratio||Enterprise Value/|
|Reliance Industries Ltd||10.68%||17,95,433||2,725||1,830||7.97||37.70||0.41||2.59||19.80|
|Tata Consultancy Services Ltd||5.13%||13,52,077||3,990||2,600||39.10||37.00||0.08||14.00||24.90|
|HDFC Bank Ltd||9.14%||9,07,810||1,650||1,164||16.50||27.60||7.20||4.33||22.50|
|Hindustan Unilever Ltd||3.16%||6,21,878||2,859||2,044||29.20||74.90||0.00||13.00||50.70|
|Housing Development Finance Corporation Ltd||6.52%||5,00,079||2,896||1,907||13.20||24.80||2.86||3.20||17.50|
|ICICI Bank Ltd||6.37%||4,92,374||735||388||13.10||24.60||7.00||3.12||20.80|
|State Bank Of India||2.28%||4,29,899||487||186||8.21||17.20||15.10||1.56||22.30|
|Bharti Airtel Ltd||2.13%||4,05,959||739||387||-22.20||357.00||2.76||6.89||9.29|
|Kotak Mahindra Bank Ltd||3.86%||3,98,472||2,078||1,301||13.10||40.10||3.85||4.70||26.60|
|HCL Technologies Ltd||1.82%||3,43,374||1,378||800||19.80||30.10||0.11||5.73||16.00|
|Asian Paints Ltd||1.92%||3,18,789||3,505||2,055||27.30||91.40||0.09||24.90||56.30|
|Bajaj FinServ Ltd||1.41%||2,89,443||18,814||5,511||13.30||70.80||3.59||8.08||22.40|
|Bajaj Finance Ltd||2.67%||2,89,443||18,814||5,511||13.30||70.80||3.59||8.21||22.70|
|Larsen & Toubro Ltd||2.70%||2,46,103||1,810||884||19.30||16.20||1.73||3.20||10.10|
|Axis Bank Ltd||2.58%||2,43,687||821||454||7.58||28.80||8.30||2.35||23.10|
|Maruti Suzuki India Ltd||1.28%||2,26,021||8,400||6,301||4.40||44.00||0.01||4.31||23.80|
|Titan Company Ltd||1.18%||2,25,249||2,610||1,154||13.60||175.00||0.75||30.00||99.90|
|Ultratech Cement Ltd||1.12%||2,12,176||8,073||4,315||13.10||32.30||0.46||4.80||16.60|
|Sun Pharmaceutical Industries Ltd||1.16%||2,02,156||847||452||6.33||35.20||0.08||4.35||19.40|
|Oil & Natural Gas Corporation Ltd||0.69%||2,01,284||173||64||7.39||9.41||0.60||0.91||4.79|
|Nestle India Ltd||0.91%||1,86,281||20,609||15,375||106.00||84.20||0.07||83.20||51.90|
|Tata Motors Ltd||0.78%||1,80,381||524||126||-22.90||0.00||2.57||3.05||6.99|
|JSW Steel Ltd||0.87%||1,64,721||776||286||19.00||11.50||1.33||3.52||7.12|
|Tata Steel Ltd||1.32%||1,62,918||1,535||370||10.80||7.50||1.20||2.22||5.19|
|Adani Ports and Special Economic Zone Ltd||0.71%||1,54,969||901||341||17.70||28.00||1.13||5.04||16.20|
|HDFC Life Insurance Company Ltd||0.88%||1,41,801||776||556||15.40||120.00||0.07||16.40||99.60|
|Divi’s Laboratories Ltd||0.80%||1,39,342||5,333||3,015||23.90||68.00||0.00||15.00||44.40|
|Power Grid Corporation Of India Ltd||0.85%||1,39,091||204||116||18.70||10.20||2.05||1.99||7.42|
|Tech Mahindra Ltd||1.12%||1,35,998||1,548||782||19.00||28.30||0.12||5.47||16.90|
|Indian Oil Corporation Ltd||0.42%||1,23,561||135||74||20.90||4.84||1.04||1.10||4.71|
|SBI Life Insurance Company Ltd||0.70%||1,19,200||1,274||755||13.60||92.50||0.00||11.30||91.10|
|Coal India Ltd||0.51%||1,17,123||204||110||37.00||8.49||0.16||3.10||4.24|
|Mahindra & Mahindra Ltd||1.01%||1,16,282||971||587||4.45||40.60||1.93||2.80||14.20|
|Bajaj Auto Ltd||0.65%||1,14,811||4,361||2,822||19.80||20.40||0.00||4.21||15.40|
|Hindalco Industries Ltd||0.93%||1,14,167||512||165||5.33||17.20||1.01||1.72||8.29|
|Grasim Industries Ltd||0.84%||1,10,377||1,713||733||7.14||18.70||1.19||1.69||8.15|
|Shree Cement Ltd||0.51%||1,00,361||32,050||20,103||15.90||38.80||0.14||6.52||20.90|
|Bharat Petroleum Corporation Ltd||0.54%||99,493||503||325||27.80||8.58||1.01||1.85||6.58|
|Britannia Industries Ltd||0.61%||93,546||4,153||3,317||46.90||54.80||0.59||26.40||36.30|
|IndusInd Bank Ltd||0.88%||91,694||1,196||571||7.55||26.70||7.06||2.15||17.00|
|Dr. Reddy’s Laboratories Ltd||0.78%||82,009||5,614||4,135||11.70||47.20||0.17||4.60||21.70|
|Eicher Motors Ltd||0.51%||79,443||3,037||2,015||12.60||48.50||0.02||6.82||27.20|
|TATA Consumer Products Ltd||0.64%||78,295||889||459||6.13||102||0.11||5.39||48.70|
|Hero MotoCorp Ltd||0.48%||58,444||3,629||2,636||18.70||18.80||0.04||3.79||12.00|
Key Financial Ratios of Nifty 50 Index
|Price to Earnings Ratio||26.98|
|Price to Book Value Ratio||4.41|
Nifty 50 Vs Sensex
|Full Form||Nifty 50 is the short-form of National Stock Exchange Fifty. It is also known as National 50 or S&P CNX Nifty.||Sensex is the short-form of Sensitivity Index. It is also known as S&P BSE Sensex.|
|Year of Launch||Nifty 50 was launched on 22nd April 1996.||Sensex was launched in 1986.|
|Managed by||Nifty 50 is managed by Index and Services and Products Ltd (IISL), a wholly owned subsidiary of NSE India.||Sensex is managed by the Bombay Stock Exchange.|
|Number of Stocks||Nifty 50 contains 50 of the largest, most traded stocks listed on the NSE.||Sensex contains 30 of the largest, most active stocks listed on the BSE.|
|Base Period||The base period for calculating Nifty 50 is 3rd November 1995.||The base period for calculating Sensex is 1978-79.|
|Base Value||The base value of Nifty 50 is 1,000 points||The base value of Sensex is 100 points|
|Base Capital||Nifty 50’s base capital is Rs 2.06 Trillion||Sensex does not have a base capital|
|Futures and Options||Futures and Options contracts are actively traded||Futures and Options contracts are not actively traded|
Derivatives of Nifty 50 Index – Sectoral Indices of NiftyThe success and performance of Nifty 50 index has resulted in introduction of various Nifty sectoral indices. While Nifty 50 index focuses on the bluest of the bluechip stocks, these nifty sectoral indices track different sectors and themes. Some of the common NIFTY indices are:
|Nifty Sectoral Indices||Constituents of the Nifty Index|
|NIFTY Auto||Amara Raja Batteries, Ashok Leyland, Bajaj Auto, Balkrishna Industries, Bharat Forge, Bosch, Eicher Motors, Exide, Hero MotoCorp, Mahindra & Mahindra, Maruti Suzuki, MRF, Tata Motors, Tube Investments, TVS Motors|
|NIFTY Bank||Axis Bank, AU Small Finance Bank, Bandhan Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, IndusInd Bank, Kotak Mahindra Bank, Punjab National Bank, RBL Bank, State Bank of India|
|NIFTY Consumer Durables||Amber Enterprises, Bata, Blue Star, Crompton Greaves, Dixon Technologies, Havells, Kajaria Ceramics, Orient Electric, Rajesh Exports, Relaxo, Titan Company, TTK Prestige, V-Guard, Voltas, Whirlpool|
|NIFTY Financial Services||Axis Bank, Bajaj Finance, Bajaj FinServ, Cholamandalam, HDFC, HDFC AMC, HDFC Bank, HDFC Life, ICICI Bank, ICICI Lombard, ICICI Prudential, Kotak Mahindra Bank, M&M Finance, Muthoot Finance, Piramal Enterprises, Power Finance Corporation, REC, SBI Life Insurance Company, Shriram Transport Finance, State Bank of India|
|NIFTY FMCG||Britannia, Colgate-Palmolive, Dabur, Emami, Godrej Consumer Products, Hindustan Unilever, ITC Limited, Marico, Nestlé India, Procter & Gamble, Radico Khaitan, Tata Consumer Products, United Breweries, United Spirits, Varun Beverages|
|NIFTY Pharma||Alembic Pharmaceuticals, Alkem Laboratories, Apollo Hospitals, Aurobindo Pharma, Biocon, Cadila Healthcare, Cipla, Divi’s Laboratories, Dr Lal Path Labs, Dr. Reddy’s Laboratories, Glenmark Pharmaceuticals, Granules India, Ipca Laboratories, Laurus Labs, Lupin, Metropolis Healthcare, Pfizer India, Strides Pharma, Sun Pharmaceutical, Torrent Pharmaceuticals|
|NIFTY IT||Coforge, HCL Technologies, Infosys, L&T Infotech, L&T Technology Services, Mindtree, Mphasis, Tata Consultancy Services, Tech Mahindra, Wipro|
|NIFTY Media||Dish TV, Hathway, INOX Leisure, Nazara Technologies, Network18, PVR Cinemas, Saregama, Sun TV Network, TV18, Zee Entertainment Enterprises|
|NIFTY Metal||Adani Enterprises, APL Apollo Tubes, Coal India, Hindalco, Hindustan Copper, Hindustan Zinc, Jindal Steel, JSW Steel, National Aluminium Company, NMDC, Ratnamani Metals & Tubes, Steel Authority of India, Tata Steel, Vedanta, Welspun Corp|
|NIFTY Energy||Adani Total Gas, Aegis Logistics, BPCL, Castrol, GAIL, Gujarat Gas, Gujarat State Petronet, HPCL, Indraprastha Gas, IOC, Mahanagar Gas, MRPL, Oil India, ONGC, Petronet LNG, Reliance Industries|
|NIFTY Pharma||Abbott India, Alembic Pharmaceuticals, Alkem Laboratories, Aurobindo Pharma, Biocon, Cadila Healthcare, Cipla, Divi’s Laboratories, Dr. Reddy’s Laboratories, Gland Pharma, Glenmark Pharmaceuticals, Granules India, Ipca Laboratories, Laurus Labs, Lupin, Natco Pharma, Pfizer India, Strides Pharma, Sun Pharmaceutical, Torrent Pharmaceuticals|
|NIFTY Private Bank||Axis Bank, Bandhan Bank, City Union Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank, IndusInd Bank, Kotak Mahindra Bank, RBL Bank|
|NIFTY PSU Bank||Bank of Baroda, Bank of Maharashtra, Bank of India, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, J&K Bank, Punjab & Sind Bank, Punjab National Bank, State Bank of India, UCO Bank, Union Bank of India|
|NIFTY Realty||Brigade Enterprises, Brookfield India REIT, DLF, Embassy Office Parks REIT, Godrej Properties, Indiabulls Real Estate, Macrotech Developers, Mindspace Business Parks REIT, Oberoi Realty, Phoenix Mills, Prestige Estates|
How to Invest in Nifty 50?There are many ways in which investors can invest in Nifty 50.
- Buy individual stocks: Investors can buy stocks in the same allocation as the Nifty 50 index. But the problem with this method of investing in Nifty 50 is the availability of capital. To buy 1 share each of the Nifty 50 index, investors will have to shell out Rs 1.57 Lakhs (as on 13th October 2021). Retail investors might not have such high investible corpus. Additionally, tracking and managing 50 stocks can get tedious.
- Trade in Nifty Futures & Options (F&O): Investors with limited cash can also invest in futures and options contract with Nifty 50 as the underlying asset. But not all investors are comfortable with F&O segment. Also, since these contracts have to be settled on the last Thursday of the month, investors might have to book losses which can be quite huge due to the high leverage available in the F&O segment.
Watch this video and learn how to select Nifty/Bank Nifty Options for Trading
- Investing in Nifty ETF’s: This is probably one the best ways to invest in Nifty 50. With Nifty ETFs, investors can get exposure to the Nifty 50 index at a fraction of the cost. So, you don’t need to shell out Rs 1.57 Lakhs to buy 1 share each in the Nifty 50 index. You can get the same exposure with Nifty ETFs. Nippon India ETF Nifty BeEs is one of the most popular Nifty ETFs in India. Nifty BeES are highly liquid and hence trading them is super convenient.
- Investing in Nifty Index Funds: For retail investors, this is the best way of investing in Nifty 50 index. Index mutual funds are passively managed and their aim is to mirror or copy a benchmark, in this case Nifty 50. Availability of capital is also not an issue as Investors can invest in index mutual funds with as little as Rs 500 per month via a systematic investment plan (SIP). Investors are also free to hold their index fund units for long-term as there is no settlement date in index mutual funds.
Benefits of Investing in Nifty 50 Index Funds
- Superior long-term returns: Index mutual funds have generated superior returns in the long-term. In fact, in the last few years, they have outperformed actively managed mutual funds. Hence, investors must include index mutual funds for long-term wealth creation. The chart below shows the superior performance of index mutual funds.
- Inefficient mirroring of the Index: To get the best possible return in line with Nifty 50 index, investors will have to accurately copy the index composition. This is not possible as partial ownership of shares is not allowed. For example: Eicher Motors Ltd has 0.58% exposure in the Nifty 50 index. The market price of Eicher Motors Ltd on 13th October 2021 is Rs 2,906. Suppose you are investing Rs 20,000. 0.58% of Rs 20,000 is Rs 116. But you cannot buy 1 share of Eicher Motors Ltd at Rs 116. Hence, exact mirroring of the index can be achieved only with Nifty BeES or Index mutual funds.
- No Fund Manager Bias: When you invest in Nifty 50 index mutual funds, the fund manager does not aim to beat Nifty 50. His job is to simply mirror Nifty’s portfolio and performance. So, the fund manager is unable to increase or decrease the allocation of selected stocks where he has strong bias.
- Low Expense Ratio: Even actively managed mutual funds have Nifty 50 as their benchmark index. However, there is a huge difference between the expense ratios of actively managed mutual funds and index funds. For example:
- The benchmark index for both Axis Bluechip Fund and HDFC Index Fund – Nifty 50 Plan is Nifty 50 TRI.
- Despite tracking the same index, the expense ratio of Axis Bluechip Fund is 1.58%. While the expense ratio of HDFC Index Fund – Nifty 50 plan is 0.40%. A high expense ratio automatically reduces your fund’s return. Hence, index funds are ideal as they have very low expense ratios.
- Rebalancing Hassle: The Nifty 50 index is evaluated and rebalanced twice every year. If you have bought individual stocks to replicate the Nifty 50 index, then you will have to rebalance the portfolio every time the index is shuffled. Apart from the hassle, you will also incur short-term capital gains tax, which will further reduce your profits. But in case of index mutual funds, the portfolio is rebalanced automatically whenever the Nifty 50 index is altered.
- Low Investment: Index mutual funds and Nifty BeEs are highly affordable. You can invest in index mutual funds with just Rs 500. This is not possible with Nifty F&O contracts as the initial margin requirements are high. Hence, index mutual funds are the best way to invest in Nifty 50 index.
|Funds||3-Years (%)||5-Years (%)||10-Years (%)|
|Axis Bluechip Fund||23.75||19.02||17.09|
|HDFC Index Fund – Nifty 50 Plan||20.79||16.99||14.26|
The chart below shows the performance of Nifty 50 index.Source: NSE India *Data as on 30th September 2021
Annual Returns Generated by Nifty 50 since 2000.
|Year||Closing level||Change in Index (Points)||Change in Index (%)|
Nifty 50 Major Single Day Falls
Nifty 50 Major Single Day Gains
|Date||Biggest Single Day Gains|