National Stock Exchange (NSE) prepares and regulates the Nifty 50 index in India. The Nifty 50 is a benchmark stock market index which represents the weighted average of top 50 largest companies in India which represents a broader view of the Indian corporate landscape. They are operated by NSE Indices. Let us read the article to know about some major benefits and steps to invest in Nifty 50.
What is Nifty 50?
Nifty 50 is a stock market Index that represents a list of the top 50 companies listed on the National Stock Exchange (NSE). It is one of the most sought tracked indices in India as it serves as a benchmark for the overall market performance of the stock market.
There are companies included from various sectors such as healthcare, banking, oil, gas, and more. There are many criteria on which companies are included in the list of fifty indexes. The National Stock Exchange (NSE) is in charge of maintaining, looking at and managing these indices. It is used by different investment companies and investors to manage their portfolios and structure investment plans.
In this article, we will learn steps to calculate the nifty 50 index, its benefits, and working.
Nifty 50 Key Highlights
Check some of the important highlights of Nifty 50 below.
- Nifty 50 is a group of 50 companies from different industries like financial services, banking, healthcare, consumer, information technology, and more.
- There are a total of 50 stock-trending investment companies listed by the National Stock Exchange (NSE).
- The National Stock Exchange Manages and looks after the companies on the list and ensures fair investment practices.
- It consists of companies from various sectors to represent the diverse economy of the country and also visualise the overall economic development of the country.
- It provides a low investment threshold with unmatched flexibility in investment and liquidity.
Working of Nifty 50 Index
The working of the nifty 50 index is based on several crucial steps. Check them below.
- Selection of companies: First the top 50 companies and most active trading companies are selected in the list by the National Stock Exchange (NSE). There are some major factors for selecting these companies such as their market capitalizations and liquidity.
- Sectors Classification: There are many major sectors in the nifty 50 index which facilitates a diverse representation of companies that captures the overall economic development of our country.
- Method to Calculate: The index value is calculated by dividing the current market value by a thousand multiplied by the base market capital value. The index value represents the total available stock shares of the company.
| Calculating Nifty 50 Value |
| Index Value = Current Market Value / (1000* Base Market Capital) |
- Review and Maintenance: Every six months the index value of Nifty 50 is reviewed and uses current market data by adding or removing companies based on current market trends.
Benefits of Investing in Nifty 50 Index Funds
The nifty 50 index represents a broad range of sectors across the country which affects the Indian Economy. Let us look at some of the major benefits of using Nifty 50 based indexes.
1. Low Investment Options
With Nifty 50 one of the major benefits is the option of starting investments with smaller amounts unlike direct stock investments. Changes in nifty 50 indices reflect the market and economic conditions in India.
2. Benchmark for Indian Equity Market
The Nifty 50 group represents the overall performance of these top trending investment companies from various sectors to help make informed investment decisions based on the performance of companies in the list.
3. Diversification
There are companies from different sectors such as IT, energy, finance, banking, and more which help reduce risk associated with individual stocks.
4. Liquidity
Nifty 50 is highly liquid because of the large companies and active trading stocks. It allows investors to easily buy or sell index funds or ETFs based on the Nifty 50 index.
5. Investment Flexibility
Investors can invest either their money or withdraw it according to their current conditions. The ability to adjust investment amounts according to the market conditions and financial conditions of the individuals is the best flexibility Nifty 50 provides to their users.
6. Periodic Rebalancing
The funds invested in Nifty 50 are adjusted automatically according to the changing market conditions to counter any change in the value of Nifty 50. It helps to ensure that the investor’s portfolio is well-aligned with the index performance. It does not require the active involvement of the investors.
7. Unbiased Ranking
Companies having more trading frequencies, transparency, good practices, strong financial performances, stable profitability, and earnings growth are more favoured to be included in the index.
Steps to Invest in Nifty 50?
The most sought method to invest in nifty 50 is through mutual funds or ETFs. These investment methods track index performances which provides exposures of the top 50 companies in the Indian Stock Market to the investors.
- Investors can start by opening a brokerage account first.
- Choose a suitable investment platform. There are many brokerage firms where users can easily sign up and create their accounts to start investing. Some of the best investment platforms are Upstox, Zerodha, SoFi, Acorns, eToro, Ally Invest, etc.
- Make sure to choose a platform with low-cost and convenient investment options.
- You can easily use these accounts to make sales (buy or sell) mutual funds or ETF units.
- You can choose periodic investment through a Systematic Investment Plan (SIP) where you can invest monthly or yearly based on your choice or invest a lump sum amount without any particular order.
- You can easily monitor your investment performance on the dashboard of the application. You can also rebalance based on market conditions or financial goals.
- Stay updated with the latest market conditions and news that may impact the Nifty 50 performance.
How to Select Stock in Nifty 50?
The process of selecting Nifty 50 stocks is complex and involves strategic planning before investing. The major criteria for the selection of stocks are based on Market Capitalization and Liquidity.
1. Market Capitalization
It is the total outstanding shares of stock which include shares that are available publicly. It is calculated by multiplying the number of stock shares outstanding by the current share price. It helps to determine the size and stability offered by the company to the investors. Companies with greater market capitalizations are ranked higher in the index and are also more stable.
2. Liquidity
Nifty 50 is highly liquid because of the large companies and active trading stocks. It allows investors to easily buy or sell index funds or ETFs based on the Nifty 50 index.
List of Companies in Nifty 50 (Latest)
Check the list of major stock companies listed in the Nifty 50 index given below.
| Nifty 50 Index Companies | |
| Company Name | Sector |
| Adani Enterprises | Diversified |
| Adani Ports & SEZ | Infrastructure |
| Apollo Hospitals | Healthcare |
| Asian Paints | Consumer Durables |
| Axis Bank | Banking |
| Bajaj Auto | Automotive |
| Bajaj Finance | Financial Services |
| Bajaj Finserv | Financial Services |
| Bharat Petroleum | Energy – Oil & Gas |
| Bharti Airtel | Telecommunication |
| Britannia Industries | Consumer Goods |
| Cipla | Pharmaceuticals |
| Coal India | Energy – Coal |
| Divi’s Laboratories | Pharmaceuticals |
| Dr. Reddy’s Laboratories | Pharmaceuticals |
| Eicher Motors | Automotive |
| Grasim Industries | Materials |
| HCLTech | Information Technology |
| HDFC Bank | Banking |
| HDFC Life | Financial Services |
| Hero MotoCorp | Automotive |
| Hindalco Industries | Metals |
| Hindustan Unilever | Consumer Goods |
| ICICI Bank | Banking |
| IndusInd Bank | Banking |
| Infosys | Information Technology |
| ITC | Consumer Goods |
| JSW Steel | Metals |
| Kotak Mahindra Bank | Banking |
| Larsen & Toubro | Construction |
| LTIMindtree | Information Technology |
| Mahindra & Mahindra | Automotive |
| Maruti Suzuki | Automotive |
| Nestlé India | Consumer Goods |
| NTPC | Energy – Power |
| Oil and Natural Gas Corporation | Energy – Oil & Gas |
| Power Grid | Energy – Power |
| Reliance Industries | Diversified |
| SBI Life Insurance Company | Financial Services |
| Shriram Finance | Financial Services |
| State Bank of India | Banking |
| Sun Pharma | Pharmaceuticals |
| Tata Motors | Automotive |
| Tata Steel | Metals |
| Tata Consultancy Services | Information Technology |
| Tata Consumer Products | Consumer Goods |
| Tech Mahindra | Information Technology |
| Titan Company | Consumer Durables |
| UltraTech Cement | Materials |
| Wipro | Information Technology |
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Nifty 50 FAQs
What is Nifty 50?
Nifty 50 is a stock market Index that represents a list of the top 50 companies listed on the National Stock Exchange (NSE).
What are the two major factors for selecting stock in Nifty 50?
The two major factors for selecting stocks are Market Capitalization and Liquidity.
What are some Nifty 50 companies?
Some of the Nifty 50 companies are Nestle, Hero Motocorp, Cipla, Asian Paints, Hindalco Industries, etc.
What is 50 in Nifty 50?
50 in Nifty 50 showcases the top major 50 trading equity stocks exchange out of 1600 total stocks.
