The NIFTY 50 is the premier index of the National Stock Exchange. The index features 50 of the largest companies, in terms of market capitalization, listed on the exchange. Since the index features companies across multiple sectors and industries, it is viewed as a general representation of the stock market as a whole.

Many investors, mutual fund houses, and even companies use the NIFTY 50 as a benchmark of the stock market’s performance. Also, the future and option derivative contracts of the index are widely popular and witness exceptional trading volume every single day.

How is NIFTY 50 calculated?

The value of the NIFTY 50 is derived using the weighted free-float market capitalization method and represents the total market value of all of the 50 stocks in relation to the base date, which is November 03, 1995.

The formula that is used to calculate the value of NIFTY 50 is as follows.

NIFTY 50 Index = (Index Market Capitalization ÷ Base Free Float Market Capitalization) x Base Index Value (1000)

Where,

Index Market Capitalization = Aggregate market capitalization of all the 50 stocks in the index (adjusted for free-float)

Base Free Float Market Capitalization = Aggregate market capitalization of all the 50 stocks as on the base date of November 03, 1995

Base Index Value = The value of NIFTY 50 as on the base date, which is set as 1,000

What are the different sets of NIFTY indices?

In addition to the NIFTY 50, the National Stock Exchange has also come up with several other NIFTY indices as well. These indices are categorized based on what they represent. Here’s a quick glimpse of some of the other NIFTY indices created by the NSE.

Broad Market NIFTY Indices

These indices are designed to be a representation of the performance of the stock market as a whole. They’re usually made up of companies across different sectors and industries. Some of the Broad Market NIFTY indices include - NIFTY 50, NIFTY Next 50, NIFTY 100, NIFTY Midcap 50 and NIFTY 500.

Sectoral NIFTY Indices

Sectoral indices represent the performance of a particular sector of the stock market. The NSE has created a separate NIFTY index for each major sector of the market. Some of the most popular sectoral indices include - NIFTY Auto, NIFTY Bank, NIFTY IT, NIFTY Private Bank and NIFTY Fin-Services.

Thematic NIFTY Indices

Thematic indices are made up of companies that are tied to investment themes. Unlike sectoral indices, thematic indices often consist of companies across different sectors. Some of the more popular thematic NIFTY indices include - NIFTY Infra, NIFTY CPSE and NIFTY MNC.

Strategic NIFTY Indices

Strategic indices are made up of companies that represent a particular trading strategy. A few of the most traded strategic NIFTY indices include - NIFTY Alpha 50, NIFTY Low Volatility 50 and NIFTY 50 Value 20.

Fixed Income NIFTY Indices

In addition to equity indices, there are also many other fixed income or debt NIFTY indices as well. They’re categorized according to the assets they represent. For instance, there’s government securities NIFTY indices, corporate bond NIFTY indices and money market NIFTY indices. Some of the most popular income NIFTY indices are - NIFTY AAA, NIFTY AA and NIFTY 10 YR G-Sec.

How to buy or invest in the NIFTY 50?

The NIFTY 50 index is only meant to be a representation of the performance of the stock market as a whole. Therefore, you cannot directly invest or buy units of the index. However, you can trade in derivative contracts such as futures and options of NIFTY 50. Alternatively, you can also invest in index mutual funds, which consist of the components of NIFTY 50 and are designed to mimic the performance of the index.

How many companies come under NIFTY 50?

As the name itself suggests, NIFTY 50 consists of 50 of the largest companies, in terms of market capitalization, listed on the NSE. Here’s a quick look at a few of the companies that make up the index.

Axis Bank
Adani Enterprises
Bajaj Auto
Bharat Petroleum
Cipla
HCL Tech
Hindustan Unilever
Maruti Suzuki
Reliance Industries
Tata Steel