Our Indian Stock market indexes work like a barometer that provides overviews of the overall growth of the Indian economy. There is the main index that is very commonly talked about among the people i.e. NIFTY 50.
The up or down in the values of NIFTY 50 provides the idea about the future what is going to happen next. The concept of the NIFTY 50 index was introduced years 1996 by the National Stock Exchange. NIFTY 50 is the abbreviation of National Stock Exchange Fifty that acts as the equity benchmark index.
This Benchmark index is a group of securities that are used for judging the performance of stocks and securities in the market. NIFTY 50 will help in tracking the financial performance of the specific group of stocks. This is the index that is owned by India Index Services and Products and a subsidiary of NSE.
How do NIFTY 50 Works?
The NIFTY 50 index represents the most prominent Indian companies that are listed on the National Stock Exchange. All these stocks can be from different sectors that will be used to evaluate the strength of the stock market. This will help in measuring the overall performance of the top 50 stock of the companies from different sectors. Even the results of NIFTY 50 will be used to measure the performance of the basket of stocks.
Among all of the stocks in the National Stock Exchange, the NIFTY 50 includes the 51 largest and most liquid Indian stocks. All these stocks are from the blue-chip companies in the Indian Market that too from different sectors. So it is quite obvious to call this index the barometer of the Indian economy. All the stocks of this index must be from the Indian and listed companies in NSE.
The NIFTY 50 index never remains constant, it keeps on changing with the performance of the stocks. In case, the performance of any stock deteriorates, it is removed from the list and the new one is added. There is continuous fluctuation in the process of the stocks and this is how the better indication of the movement in the market is seen. The person can easily compare the price levels of the different stocks at different periods.
The NIFTY 50 is the index that increases or decreases according to the performance of the overall economic condition of the country. If the condition of the economy is healthy, there will be a great thrive in the investment culture. This will reflect a great impact on the NIFTY 50 index in a positive way.
Different Benefits of Investing in NIFTY 50
No person can directly invest in the NIFTY 50 index as they need to do it by investing in mutual funds or derivatives. Mutual funds have almost the same portfolio of stocks that are also represented in the NIFTY 50 index.
A company like ICICI Direct provides with the chances to invest in these funds and make it cost-effective, opportunity to get high returns and also offers diversification in the investments. This is how the person can experience broad market exposure. It is quite easy to navigate the factual fund section and accordingly choose the NIFTY index fund.
List of Investing in NIFTY 50 are Stated Below:
Sector | Companies |
| Automobile | Eicher Motors Ltd, Bajaj Auto Ltd. |
| Banking | Kotak Mahindra Bank Ltd, ICICI Bank Ltd, HDFC Bank Ltd. |
| Cement | Grasim Industries Ltd, UltraTech Cement Ltd. |
| Chemicals | UPL Ltd. |
| Consumer Goods | Titan Company Ltd, Tata Consumer products Ltd, ITC Ltd. |
| Energy – Power | NTPC Ltd. |
| Financial Services | Bajaj Finance Ltd. |
| Insurance | SBI Life Insurance Co |
| Information Technology | Wipro Ltd, Tech Mahindra Ltd, Tata Consultancy Services Ltd. |
| Infrastructure | Adani Port and Special Economic Zone |
| Mining | Coal India Ltd. |
| Metals | Hindalco Industries Ltd, JSW Steel Ltd. |
| Oil & Gas | Bharat Petroleum Corp. Ltd, Indian Oil Corporation Ltd. |
| Pharmaceuticals | Cipla Ltd, DrReddy’s Laboratories Ltd. |
| Telecommunication | Bharti Airtel Ltd. |
There is a lot of diversity in the portfolio of the stocks that come under this index. It will clearly show the investment growth. In case one sector is not performing well, some other sector will surely perform well to cover none performing sector. This will help in reducing the risk of losses and also improves the overall returns on the investment. The person can simply invest in a variety of stocks.
There is less cost involved to invest in the NIFTY 50 index. This index has more secondary expense ratio in comparison to any other mutual funds. It is a passive fund that has low management fees and no hidden costs.
There is complete transparency in the working of the stocks, so the person can see the results of their investment. There are no such biases on the part of the fund manager to decide which stocks to invest in.
The investment in NIFTY 50 provides tax benefits which is a great thing for the person in long run. If there are gains on stocks that were held for less than one year, a rate of 15% is applied to the tax holders. But if the person gains on the investment held for more than one year, then only 10% is applicable on the tax-holder.
So it is quite clear that investment in NIFTY 50 is a form of Passive investment. It is great for the people that want to invest at low risk and gain high advantages. If the person invests with patience and good research, he is surely going to get good and steady returns from it.
