What is Nifty & How it is Calculated | List of Top 50 Companies?
On the other hand, Nifty is now trading 51 stocks. As a result, Nifty is often referred to as Nifty50 or CNX Nifty.
What is NIFTY?
The National Stock Exchange created the NIFTY market index. It is a combination of the words National Stock Exchange and Fifty, which was coined by the NSE on April 21, 1996. The NIFTY 50 is a benchmark-based index and the NSE's flagship, showcasing the top 50 equity equities listed on the stock exchange out of a total of 1600.
Information technology, financial services, consumer goods, entertainment and media, financial services, metals, pharmaceuticals, telecommunications, cement and its products, automobiles, pesticides and fertilizers, energy, and other services are among the 12 sectors of the Indian economy represented by these stocks.
NIFTY is one of two national indices; the other is SENSEX, a Bombay Stock Exchange product. The India Index Services and Products (IISL), a wholly-owned subsidiary of the National Stock Exchange Strategic Investment Corporation Limited, owns the company.
The NIFTY 50 index tracks the trends and patterns of blue-chip businesses, i.e. India's most liquid and largest stocks.
NIFTY is a derivatives index that includes the NIFTY 50, NIFTY IT, NIFTY Bank, and NIFTY Next 50. It is part of the NSE's Futures and Options (F&O) segment.
What is Meant by Nifty?
The meaning of Nifty is derived from a combination of two terms, namely "National Stock Exchange" and "fifty." The National Stock Exchange Fifty is abbreviated as NSE Fifty. It is a collection of the top 50 equities stocks in the index that are actively traded. On the other hand, Nifty is now trading 51 stocks. As a result, Nifty is often referred to as Nifty50 or CNX Nifty.
The Nifty is a well-known stock index. It was first offered by India's National Stock Exchange. This index was established in 1992, and trading began in 1994. India Index Service & Products Limited owns and manages it (IISL). IISL is a specialist Indian firm that focuses on an index as its main product. It offers index funds, index futures and options, equity futures and options, and other financial products.
What is an Index?
A stock index is a metric for determining how much the stock market has changed. It keeps track of pricing changes and market performance. To create an index, select a few equities from a list of stocks that share comparable features. This classification of stocks might be based on industry, total market capitalization, or business size.
The values of the underlying group of equities can be used to compute the value of the stock market index. Any change in the value of the underlying stock affects the stock index's value. If the majority of stocks rise in price, the index will climb as well, and vice versa.
As a result, an index is a good indicator of market fluctuations. It represents the overall investment sentiment and price changes in the market. This is how investors and financial managers determine the worth of their portfolio holdings. They can also use it to compare their results to a benchmark index. what is nifty
The following are some of India's standard indices:
- NSE Nifty and BSE Sensex are examples of benchmark indices.
- Nifty 50, BSE 100, Nifty Next 50, and other broad-based indexes
- BSE Smallcap, BSE Mid Cap, Nifty Small cap, Nifty Mid Cap, and other market capitalization indexes
- Nifty FMCG, Nifty Bank, Nifty IT, Nifty Auto, and other sectoral indices are examples.
The Indian economy is represented by the Nifty 50 index in the following sectors.
It follows blue-chip corporations' patterns and tendencies. These are India's largest and most liquid corporations. Nifty has a number of sub-indices that are based on different asset classes, sectors, or segments. NIFTY IT, NIFTY Next 50, NIFTY Bank, NIFTY Small Cap, and others are among them. In addition, Nifty has 1600 enterprises listed.
NSE's benchmark index is the NIFTY 50. It is one of the National Stock Exchange's two national indices and a broad-based index. NSE is also a major stock exchange in India. It is India's largest trade platform. The Sensex, which is a product of the Bombay Stock Exchange BSE, is another national index. what is nifty
|Automotive||Engineering||Metals & Mining|
|Banking/Finance||Food & Beverage||Oil & Gas|
|Consumer durables & non-durables||Media||Telecom|
Which companies are a part of Nifty?
The Nifty index is reconstituted every six months to reflect the most recent stock performance. It examines the stock's performance over the previous six months. It also verifies that the businesses meet the eligibility requirements. It either removes or adds stocks to the stock list based on these criteria. Four weeks prior to reconstitution, the respective company is notified of any elimination or addition.
The Nifty index is managed by an excellent team of professionals at the NSE. It is a committee that provides advice and expertise on matters concerning equity indices.
The following are the requirements for companies to be listed on the Nifty Index:
- The National Stock Exchange must be notified of the company's existence. It has to be an Indian firm.
- The shares of the corporation must be extremely liquid. The average impact cost is used to determine liquidity. The trading price of a single share in relation to the index's weight to the company's market capitalization is known as impact cost. The company's impact cost should be less than or equal to 0.50 percent for the next six months. With 90% of the observations made on a portfolio worth Rs.10 crores, it should be lower.
- The company's trading frequency should have been 100% over the previous six months.
- The company's average market capitalisation should be free-floating. This should be 1.5 times the value of the index's smallest company.
- DVR or Differential Voting Rights (DVR) companies' shares may also be eligible for the Nifty 50 Index.
Aside from the periodic routine, the index is reconfigured when the company goes through particular events, such as spin-offs, mergers or acquisitions, suspensions, or compulsory delisting. Nifty also performs regular screenings of the companies to ensure that they are complying with regulations.
The corporations must also follow the Securities and Exchange Board of India's specific directives (SEBI). The companies may be delisted from the indices if this does not happen.
Nifty 50 Companies List 2021
|Adani Port and Special Economic Zone||Infrastructure|
|Asian Paints Ltd.||Consumer Goods|
|AXIS Bank Ltd.||Banking|
|Bajaj Auto Ltd.||Automobile|
|Bajaj Finance Ltd.||Financial Services|
|Bajaj Finserv Ltd.||Financial Services|
|Bharat Petroleum Corp. Ltd.||Oil & Gas|
|Bharti Airtel Ltd.||Telecommunication|
|Britannia Industries Ltd.||Consumer Goods|
|Coal India Ltd.||Mining|
|Divi’s Laboratories Ltd.||Pharmaceuticals|
|Dr. Reddy’s Laboratories Ltd.||Pharmaceuticals|
|Eicher Motors Ltd.||Automobile|
|Grasim Industries Ltd.||Cement|
|HCL Technologies Ltd.||IT|
|HDFC Bank Ltd.||Banking|
|HDFC Life Insurance Co. Ltd.||Insurance|
|Hero MotoCorp Ltd.||Automobile|
|Hindalco Industries Ltd.||Metals|
|Hindustan Unilever Ltd.||Consumer Goods|
|Housing Development Finance Corporation Ltd.||Financial Services|
|ICICI Bank Ltd.||Banking|
|Indian Oil Corporation Ltd.||Oil & Gas|
|IndusInd Bank Ltd.||Banking|
|ITC Ltd.||Consumer Goods|
|JSW Steel Ltd.||Metals|
|Kotak Mahindra Bank Ltd.||Banking|
|Larsen & Toubro Ltd.||Construction|
|Mahindra & Mahindra Ltd.||Automobile|
|Maruti Suzuki India Ltd.||Automobile|
|Nestle India Ltd.||Consumer Goods|
|NTPC Ltd.||Energy – Power|
|Oil & Natural Gas Corporation Ltd.||Oil & Gas|
|Power Grid Corporation of India Ltd.||Energy – Power|
|Reliance Industries Ltd.||Oil & Gas|
|SBI Life Insurance Co.||Insurance|
|Shree Cement Ltd.||Cement|
|State Bank of India||Banking|
|Sun Pharmaceutical Industries Ltd.||Pharmaceuticals|
|Tata Consultancy Services Ltd.||IT|
|Tata Consumer products Ltd.||Consumer Goods|
|Tata Motors Ltd.||Automobile|
|Tata Steel Ltd.||Metals|
|Tech Mahindra Ltd.||IT|
|Titan Company Ltd.||Consumer Goods|
|UltraTech Cement Ltd.||Cement|
How is Nifty calculated?
The float-adjusted and market capitalization methods are used to calculate the Nifty 50 indexes. The level index displays the total market value of the stocks in the index over a given time period. The Nifty index's current base duration is November 3rd, 1995. Stocks have a base value of 1000 rupees and a base capital of Rs.2.06 trillion rupees.
The following is the formula for computing the index value:
Market capitalization = Price * Equity Capital
Free Float Market Capitalization = Price * Equity Capital * Investable Weight Factor
Index value = Current market value / (1000 * Base market capital)
The Investable Weight Factor (IWF) is a metric used to calculate how many shares are accessible for trade. Because the value of a stock fluctuates every day, the index is calculated in real-time.
Not only does the formula determine the value, but it also calculates the modifications in corporate operations. Stock splits, rights issues, and other corporate changes are only a few examples. The Nifty share market serves as a benchmark against which all equity share markets in India are measured. It performs index maintenance checks on a regular basis. As a result, it is guaranteed to be stable and effective. This index has the potential to be a long-term benchmark for the Indian stock market. what is nifty
How is Nifty different from Sensex?
Both the Nifty and the Sensex are Indian stock market indicators that show the strength of the stock market. Despite their similarities to the broad-based index, Sensex and Nifty are not the same.
- The term nifty comes from the word National Fifty. S&P CNX Nifty is another name for it.
- The term Sensex is derived from the word Sensitive Index. The S&P BSE Index is another name for it.
Date of Commencement
- The NSE Nifty was founded in 1992. However, it did not begin operations until November 1994.
- The BSE Sensex was founded in 1986.
- Nifty is owned and operated by Index and Services and Products Limited (IISL), an NSE India subsidiary.
- Sensex is owned by the Bombay Stock Exchange (BSE). BSE is also India's largest trading platform.
- Nifty is based on the National Stock Exchange. Exchange Plaza, Bandra Kurla Complex, Mumbai is where the company's headquarters are located.
- BSE is the basis for Sensex. The company headquarters are located on Dalal Street in Mumbai.
- Nifty’s base period is 3rd November 1992
- Sensex base period is 1978-1979
- The nifty base value is 1000
- Sensex base value is 100
- Nifty base capital is Rs.2.06 trillion
- Sensex does not have a base capital
Number of constituents
- The Nifty index is made up of the top 50 stocks traded on the NSE.
- The Sensex index is made up of the top 30 equities traded on the BSE.
Number of sectors
- The Nifty is a broad market index that includes companies from 24 different industries.
- The Sensex index includes firms from 13 different industries.
- Nifty has 1600 companies listed
- Sensex has 5000 companies listed.
As a result, there isn't much of a difference between the Sensex and the Nifty. They're both interested in large-cap stocks. Nifty is broader than Sensex since it includes a greater number of large-cap stocks. In addition, compared to Sensex, Nifty has a more diverse portfolio. On the NSE India platform, there is much more trading going on. what is nifty
What are the advantages of purchasing the Nifty 50 Index?
There are a variety of options to invest in the Nifty 50. Index funds, Nifty futures and options, and ETFs are a few examples. The index cannot be purchased directly; instead, investors must purchase all 50 shares in the same proportion or participate in index funds and ETFs. The following are some of the advantages of investing in index funds and ETFs based on the Nifty:
- Good returns in the long run: The Nifty 50 began trading in 1996 with a $1,000 base value. In 2021, it surpassed the 15000 milestones. As a result, investing in index-based funds will deliver good long-term returns.
- No bias by the fund manager: The index fund's portfolio is entirely dependent on the index, and the fund manager has no control over it. As a result, it is free of fund manager bias.
- Lower expense ratio: When compared to other forms of mutual funds, index funds have a lower expense ratio. Because these are passive funds, the fund manager's role is limited, and as a result, fund management fees are modest.
- Market returns: Because they are a duplicate of the index, index funds provide market returns. The fluctuation of the index has a direct impact on their performance. As a result, it's much easier to keep track of your money.
Major Milestones of NIFTY?
The major Nifty 50 milestones are listed here.
- The NSE is officially accredited as a stock exchange in 1993.
- The Nifty 50 index was first introduced in 1996, with a base value of 1000. It is the NSE's flagship index.
- Due to the IT boom, the Nifty reached 1800 in the year 2000.
- Nifty reaches 3000 in 2006, thanks to a surge in the service sector.
- 2007: Nifty grew to 5000
- 2014: The nifty has reached 7,000 points since the NDA took power at the center.
- 2017: The Nifty rose to 9,000 points thanks to strong FII involvement.
- GST implementation, a healthy monsoon, and solid corporate profitability propelled the Nifty to 10,000 points in 2017.
- 2018: The Nifty reached 11,000 due to a drop in crude oil prices and a strong World Bank report on the Indian economy.
- Nifty reaches 15,000 in 2021 as a result of the COVID 19 vaccination distribution.
Frequently Asked Questions
What are the equity Market timings?
Monday through Friday, the equity market is open from 9:15 a.m. to 3:30 p.m. The commodity market, on the other hand, is open Monday through Friday from 10:00 a.m. to 11:30 p.m.
Who owns Nifty?
The Nifty is a prominent stock index created by India's National Stock Exchange. India Index Service & Products Limited owns and manages the index (IISL). It was launched in 1992, and trading on the Nifty began in 1994. IISL is a specialist Indian firm. Its primary product is an index.
Which is better NSE or BSE?
Both the NSE and the BSE are Indian stock market indices that show how strong the securities markets are. They're both interested in large-cap stocks. Nifty is broader than Sensex since it includes a greater number of large-cap stocks. In addition, compared to Sensex, Nifty has a more diverse portfolio. As a result, NSE may be better for large investments due to the amount of trade, whilst BSE may be better for beginners.
Can I buy Nifty 50?
You can't buy shares in the Nifty 50 index directly; instead, you can buy shares in all 50 firms that make up the index. You must buy the same number of shares in the same proportion or invest in index funds and exchange-traded funds (ETFs). Index funds, Nifty futures and options, and ETFs are some of the other methods to invest in the Nifty 50.
What is Bank Nifty India?
Bank Nifty is an index that represents the 12 most liquid and highest-yielding banking equities on the National Stock Exchange. It serves as a benchmark for the Indian banking sector's capital market performance.
Is Nifty 50 a good investment?
The Nifty 50 can be invested in a variety of ways, with the major benefits being high returns on long-term investments. Index funds, Nifty futures and options, and ETFs are all alternatives. You cannot invest directly in the index, but you can acquire all 50 shares in the same proportion. You can benefit from decreased expenses and higher market returns.
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