3/29/2023 0 Comments Nifty stock![]() Even of all the trades done on the NSE, about 50% are in just these 50 stocks. In other words, say you added up the market caps of all the 1,300 companies on the NSE – the 50 NIFTY companies would constitute 65% of this total and the balance 1250 companies total upto 35%. Just these 50 stocks represent 65% of the total market capitalization of all the companies listed on the NSE. What are the Pros and Cons of Investing in the NIFTY 50? What this implies is that the NIFTY is frequently churning out the “losers” – 20 of the 50 stocks that were part of the NIFTY in 2010 are no longer in the index – this means 40% of the index has changed in just 10 years. Long term, of course, the impact of these movements is limited and the stock moves based on the merits of its own fundamentals. The reverse is true when a stock leaves the index. In fact, studies have shown that when a stock is added to the index, in the run up to the inclusion, its stock price actually moves up just on the news of its inclusion as many global funds, ETFs have to add those stocks to the portfolio. ![]() This is important for many baskets and financial products that are built around owning NIFTY stocks so they can start rejigging their portfolio. The NSE gives the general public four weeks notice of the changes to be made. This list is reviewed every six months when companies are removed and added to the index. ![]() Listed for at least six months (or if it just had an IPO, then listed for at least one month).Should be available in the futures and options (F&O) segment to trade. ![]() have sufficient traded volume using a more detailed criteria. Apart from that, stocks should also fulfill the following criteria: Then picks the top 50 to be part of the index. The NSE ranks companies by free-float market capitalization (free float essentially means shares available for the general public to buy and are not locked in). To put this in perspective, some of the companies in the NIFTY 50 Index are Infosys, Reliance Industries, HDFC Bank, ITC, Asian Paints, etc. Most NIFTY 50 companies exhibit a strong balance sheet, robust growth numbers and an expansive global footprint. Then, in 1996, the NIFTY 50 took on additional meaning when the NIFTY 50 Index appeared on the National Stock Exchange of India and became a staple feature of the Indian stock market. Companies such as Coca-Cola, Xerox and IBM are examples of the NIFTY 50 stocks that investors didn’t need to think twice about before buying. These stocks were regarded as sure-shot quality buys or blue-chip stocks that were best-in-class and traded at high valuations. History of the NIFTY 50īack in the 1960s and 1970s, NIFTY 50 referred to the fifty most popular large cap stocks on the New York Stock Exchange. For foreign investors tracking the Indian markets, their first reference point is NIFTY movement and their first few investments in India are usually in NIFTY stocks. This further means the weighted average performance of those 50 stocks was up. The other is the Sensex – a similar index of 30 stocks managed by the Bombay Stock Exchange (BSE).Įven though there are 1,300 stocks listed on the NSE, when someone says “the market was up today”, they usually mean the NIFTY 50 index was up. It is one of the two most referenced barometers used by investors to track how the “stock market is doing”. The NIFTY 50 is an index of the country’s top 50 companies by market capitalization that are listed on the National Stock Exchange (NSE). Below is a breakdown of its significance and ways to start investing in NIFTY 50 stocks. However, for novice investors and those who are uninitiated into the world of finance, NIFTY 50 could come across as just another finance jargon. A staple across financial papers and news about stock markets in India, the term “NIFTY 50” is ubiquitous in its presence.
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