Do you often come across the terms NSE, and Nifty without understanding what is being referred to? A guide to Nifty is given below: The most widely used equity share benchmark index in India.
What Does Nifty Mean In Relation To Stock Market?
The National Stock Exchange introduced the well-known stock market index Nifty. “National Stock Exchange” and “fifty” are combined to form the phrase “Nifty.” This is so because the NSE’s NIFTY 50 benchmark index, which features the 50 best-performing equity firms currently being traded on the platform, is its flagship index. On the NSE, 1600 equities are available for trade each day.
Knowing now what Nifty 50’s is, lets move on to its constituents. We can see that the firms on its index represent 12 major economic sectors in India. These include financial services, telecommunications, information technology, consumer goods, metals, entertainment and media, pharmaceuticals cement, fertilisers and pesticides, vehicles, energy, and more. Blue-chip firms’ patterns and broad trends are followed by Nifty. These are India’s biggest and most liquid corporations.
One of India’s two national benchmark indices is the NIFTY 50. The 30 best-performing stocks on the Bombay Stock Exchange make up SENSEX, the other benchmark. NSE also has launched other related indices which focus on a particular sector/industry or segment. Some of the indices related to Nifty are NIFTY IT, NIFTY Next 50, and NIFTY Bank—
Conditions for NIFTY Listing Eligibility
NIFTY is reconstituted every six months in order to stay current with the newest stocks and trends. During this time, it takes the stock performance over the previous six months into account and determines whether a company’s shares meet the eligibility requirements. The NIFTY index is currently managed by a team of experts from NSE Indices Limites.
This index advisory committee provides direction and knowledge on significant issues pertaining to equity indices. As a result, the index managers will update the benchmark by removing or adding new or old stocks. Companies get involved four weeks before the reconstitution with new additions. The following requirements must be met in order for a listing to be accepted on NIFTY.
- While having a national domicile, the firm must be registered with the National Stock Exchange (NSE).
- Stocks of the company ought to be very liquid. The average of their impact cost serves as a gauge for this. Impact cost is the cost of trading a single security in relation to the weight of the index as determined by the market capitalization of the company. The company’s effect cost for a period of six months must be lower than or equal to 0.50% or lower than 90% of the sightings and analyses performed on a portfolio worth more than 10 crores.
- The company’s trading frequency during the previous six months should have been 100%.
- The corporation should have a market capitalisation that floats freely on average.
The Nifty 50 is open to any company with DVR shares, often known as shares with “Differential Voting Rights. “In addition to Nifty’s six-month reconstitution cycle, the index also undergoes reconstitution if a company experiences events like spin-offs, suspensions, forced delistings, or mergers and acquisitions. In order to monitor if each of its companies is abiding by the rules for ETFs and Index Funds in the portfolio, Nifty additionally screens each of them quarterly. The Securities and Exchange Board of India, or SEBI, is constantly issuing new regulations that businesses must follow or risk being removed from indices like the Nifty.
Top NIFTY-Listed Companies
The table below lists the Nifty 50 companies as on 8 September 2022
| Adani Ports and Special Economic Zone Ltd. | Services |
| Apollo Hospitals Enterprise Ltd. | Healthcare |
| Asian Paints Ltd. | Consumer Durables |
| Axis Bank Ltd. | Financial Services |
| Bajaj Auto Ltd. | Automobile and Auto Components |
| Bajaj Finance Ltd. | Financial Services |
| Bajaj Finserv Ltd. | Financial Services |
| Bharat Petroleum Corporation Ltd. | Oil Gas & Consumable Fuels |
| Bharti Airtel Ltd. | Telecommunication |
| Britannia Industries Ltd. | Fast Moving Consumer Goods |
| Cipla Ltd. | Healthcare |
| Coal India Ltd. | Oil Gas & Consumable Fuels |
| Divi’s Laboratories Ltd. | Healthcare |
| Dr. Reddy’s Laboratories Ltd. | Healthcare |
| Eicher Motors Ltd. | Automobile and Auto Components |
| Grasim Industries Ltd. | Construction Materials |
| HCL Technologies Ltd. | Information Technology |
| HDFC Bank Ltd. | Financial Services |
| HDFC Life Insurance Company Ltd. | Financial Services |
| Hero MotoCorp Ltd. | Automobile and Auto Components |
| Hindalco Industries Ltd. | Metals & Mining |
| Hindustan Unilever Ltd. | Fast Moving Consumer Goods |
| Housing Development Finance Corporation Ltd. | Financial Services |
| ICICI Bank Ltd. | Financial Services |
| ITC Ltd. | Fast Moving Consumer Goods |
| IndusInd Bank Ltd. | Financial Services |
| Infosys Ltd. | Information Technology |
| JSW Steel Ltd. | Metals & Mining |
| Kotak Mahindra Bank Ltd. | Financial Services |
| Larsen & Toubro Ltd. | Construction |
| Mahindra & Mahindra Ltd. | Automobile and Auto Components |
| Maruti Suzuki India Ltd. | Automobile and Auto Components |
| NTPC Ltd. | Power |
| Nestle India Ltd. | Fast Moving Consumer Goods |
| Oil & Natural Gas Corporation Ltd. | Oil Gas & Consumable Fuels |
| Power Grid Corporation of India Ltd. | Power |
| Reliance Industries Ltd. | Oil Gas & Consumable Fuels |
| SBI Life Insurance Company Ltd. | Financial Services |
| Shree Cement Ltd. | Construction Materials |
| State Bank of India | Financial Services |
| Sun Pharmaceutical Industries Ltd. | Healthcare |
| Tata Consultancy Services Ltd. | Information Technology |
| Tata Consumer Products Ltd. | Fast Moving Consumer Goods |
| Tata Motors Ltd. | Automobile and Auto Components |
| Tata Steel Ltd. | Metals & Mining |
| Tech Mahindra Ltd. | Information Technology |
| Titan Company Ltd. | Consumer Durables |
| UPL Ltd. | Chemicals |
| UltraTech Cement Ltd. | Construction Materials |
| Wipro Ltd. | Information Technology |
You can explore the price of stocks listed above by visiting kuvera and check out the nifty share price.
How is the NIFTY calculated?
Both a market capitalization-weighted method and a float-adjusted method are used to calculate the Nift 50’s indices. The index level displays the total market value of the shares that have been included in it for a specific period of time. Nifty’s base period begins on November 3, 1995. The base value of the index is 1000, and its initial investment is $2.06 trillion. The index’s value is determined using the following formula:
Value of Index: (1000 * Base Market Capital) / Current Market Value
Value is computed using a variety of methods in addition to the formula. Corporate procedural changes such stock splits, rights insurance, and others are also taken into consideration. Since NIFTY serves as the standard by which all Indian equity share markets are measured, it frequently performs index maintenance checks. This guarantees that it is stable and functional so that it may continue to serve as a benchmark index for the nation.
FAQ
- Which has more companies Nifty 50 or Sensex
Nifty comprises of 50 companies whereas Sensex consists of 30 companies.
- Can I Buy Nifty 50
No you cannot buy Nifty 50 but you can mutual funds which track Nifty 50 and invest in companies which constitute Nifty 50
You can invest in mutual funds without paying any commission or brokerage through Kuvera which is India’s most loved zero commission mutual fund investment platform. Kuvera is also one of the best apps for trading.