NIFTY is the name given to the National Stock Exchange of India, which is a benchmark index of the Indian equity market. The National Stock Exchange (NSE) was started on 21 April, 1996. Nifty 50 is the group of the top 50 shares listed on the exchange, which includes the largest large-cap shares of India, which are selected based on their market liquidity and free-float capitalization.
Which are the top companies listed in Nifty 50?
Let us tell you below about the top 10 companies of Nifty 50, their market capital, and the field they are linked to.
- Reliance Industries Limited whose business is Oil & Gas – Refining & Marketing and its market capital in September 2024 is ₹20,03,987.99.
- Tata Consultancy Services Limited whose business is IT Services & Consulting and its market capital in September 2024 is ₹13,93,784.79.
- HDFC Bank Limited whose business is Private Bank and its market capital in September 2024 is ₹11,63,585.70.
- Bharti Airtel Limited whose business is Telecommunication Services and its market capital in September 2024 is ₹8,28,215.69.
- ICICI Bank Limited is a private bank and its market capital in September 2024 is ₹7,97,798.94.
- State Bank of India is a public bank and its market capital in September 2024 is ₹7,49,497.34.
- Infosys Limited is engaged in IT Services and Consulting and its market capital in September 2024 is ₹6,07,596.73.
- Hindustan Unilever Limited is engaged in FMCG – Household Products and its market capital in September 2024 is ₹5,58,639.91.
- ITC Limited whose business is FMCG – Tobacco and its market capital in September 2024 is ₹5,45,584.55.
- Larsen & Toubro Limited whose business is Construction Engineering and its market capital in September 2024 is ₹4,97,475.12.
What is an Index?
The index that shows the ups and downs of the stock market is called the index. Only the top companies are included in the index and their going up or down causes the market to go up or down.
How many types of nifty indexes are there?
Several types of nifty indexes are there, let’s know about them:-
Nifty50
This is the biggest and major index of India which is called the National Stock Exchange. Companies are included in the index based on free-float market capitalization of shares, inclusion of any share in Nifty 50 is a very difficult task.
Nifty Next 50
50 companies after Nifty 50 are included in this index, mostly if any share has to be removed from the Nifty 50 index, then any share is taken from these after that.
Nifty 500
It includes the top 500 companies listed in the share market and it accounts for almost 95% of the market value of the share market.
Nifty Midcap 150
It includes the top 150 midcap companies listed in the share market based on their free float market capitalization.
Nifty Smallcap 250
It selects the smallest companies listed in the share market based on their free float market capitalization.
Nifty Bank
Nifty Bank Index is a very powerful index that represents Indian banking stocks. It includes the top banks of India and it gives an idea of the top or bottom of the banking sector.
Nifty IT
This index leads the top Indian IT companies, whose upward or downward movement is known through this index.
Nifty Metal
It includes the top companies related to metal work in India, which are involved in iron mining and related activities. It tells us the ups and downs of metal shares.
Nifty Auto
This index includes a group of companies related to the automobile sector and automotive sector, which indicates the upward or downward movement of this sector.
Nifty Reality
The index leading the real estate sector is called nifty reality which shows the performance of the stocks associated with this sector, and how much strength they have to go to the top or bottom.
Nifty FMCG
Sectors related to Fast Moving Consumer Goods i.e. FMCG are included in this and the performance of those companies can be monitored.
Nifty Pharma
We can get information about pharma-related companies from this nifty pharma index which includes top pharma companies.
Nifty Energy
This index shows top Indian energy companies, the energy resources discovered by them, and the impact they have on the shares.
Why is the Nifty index important for investors?
Let’s find out why Nifty is so important and what are its major reasons:-
A bench-marking tool to check portfolio performance
Nifty is a benchmark index of a major Indian stock market that leads the growth and development of companies listed on India’s national stock exchange.
Investors use it as a bench marking tool to check the performance of their portfolio against the overall market.
To track market sentiments and trends
The nifty index gives investors a way to know what the overall sentiments and trends are in the market at the moment, as well as what is happening in which sector and industry. This information is extremely valuable for any investor as it further strengthens their decision making.
Taking investment decisions based on nifty’s performance
While investing, many people use the nifty index as a tool, through which they get to know whether the time is right for investment or whether to hold it for now.
Major points of nifty
- In 1993, Nifty was declared a majority stock exchange.
- In 1996, Nifty 50 index was launched, whose base value at that time was 1000 points.
- In 2000, NSE Nifty50 crossed 1800 due to boom in the IT sector.
- In 2006, National Stock Exchange Fifty reached 3000 for the first time due to boom in the service sector.
- In 2007, Nifty50 achieved its first 5000 point milestone.
- In 2014, Nifty 50 crossed 7000 for the first time when NDA government was formed for the first time.
- In 2017, due to strong FII investments, Nifty 50 touched the 9000 mark for the first time.
- In 2017, GST implementation, good monsoon and better corporate earnings made Nifty touch the 10,000 mark for the first time.
- In 2018, due to a slowdown in crude oil, Indian stock market was able to touch the 11,000 mark, in which the positive sign given by the World Bank on the Indian economy was also important.
- In 2023, Nifty touched a very major mark of 20,000.
- In 2024, Nifty has crossed the figure of 25,000.
How is Nifty calculated?
The formula for Nifty calculation is given below:-
Current market value / (Base market capital * 100)
Where: Current market value is the weighted overall market capitalization of all the 50 companies included in the index.
The base market capitalization of Nifty is that of the overall 50 companies listed in Nifty.
What are the benefits of investing in Nifty?
There are many benefits of investing in Nifty, such as:-
Diversification:-
Nifty 50 includes different indices according to sector and market capital. By doing this, investors get the benefit of bringing liquidity in their investment portfolio. And by doing this, the risk of loss in their portfolio is reduced.
Liquidity:-
There is a lot of liquidity in nifty, so it is quite easy to buy and sell its shares.
Transparency:-
Nifty is a completely transparent index which provides detailed information to investors about the companies listed in the index.
What are the factors that affect nifty?
There are many factors that affect the Nifty going up or down, such as the rise in inflation and recession in the whole world. Due to this, you may see a fall or fall in the Nifty. The effect of the increase or decrease in interest rates by banks also plays a part in the share market going up or down.
What things should be kept in mind while investing in nifty 50?
Before investing in nifty, always keep in mind the points given below:-
Company fundamentals
It shows the financial and non-financial aspects of the company such as how much is the company’s revenue, what the profit margin is, what the debt-to-equity ratio is, what the position of the industry is and what the management quality etc is.
Valuation
The value of the company’s shares should be correct according to its income and growth potential, that is why investors look at the valuation of the company to see whether the value of the shares is less or more than the market.
Market trends
There are many factors related to the share market going up or down which you need to know. Like inflation, interest rates, geopolitics etc. These are the factors that take the nifty 50 index up or down.
Investment horizon
It means for how long you want to invest in a share, and what is your future plan in this.
Cost
Every brokerage firm has its own calculation for investing in nifty 50. This brokerage platform charges you brokerage fees, tacit and mutual funds expenses along with many other costs which make a significant difference to your investment.
Frequently Asked Questions on Nifty 50
What is the meaning of nifty and how many companies are there in the nifty 50 index?
Nifty means National Stock Exchange, it is the index of Indian share market. Nifty is an index that tracks the top 50 most traded companies in India, and more than 1600 companies are listed in it.
When was nifty started?
Nifty was started on 22 April, 1996 and for this, 50 top companies filed in different types were selected.
What is bank nifty?
Bank nifty is an index of top 12 banks of India whose movement is based on the movement of these 12 banks going up or down. Through this index you can find out whether investing in banking index is still profitable or not.
When does nifty open?
Nifty is open from 9:15 in the morning till 3:30 in the afternoon which is for 5 days in a week i.e. from Monday to Friday.
What is nifty 50?
Nifty 50 is a group of top 50 companies listed in national stock exchange in which shares of companies of different fields are listed.
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