Futures and options sample answer
Nifty 50 is an Indian stock market index made of 50 stocks representing the top companies in 13 sectors with a specific weightage assigned to each stock and sector. These stocks belong to a diverse range of sectors within the Indian economy, including Information Technology (IT), financial services, consumer goods, entertainment and media, metals, pharmaceuticals, telecommunications, cement and allied products, automobiles, pesticides and fertilisers, energy, and various other sectors. The Nifty 50 plays a crucial role in guiding investment decisions and is frequently used as a benchmark to gauge the performance of Indian stock markets as a whole
Below are the stocks included in Nifty 50 with their sectors:
Company Name
Industry
Bajaj Auto Ltd.
Automobile and Auto Components
Eicher Motors Ltd.
Hero MotoCorp Ltd.
Mahindra & Mahindra Ltd.
Maruti Suzuki India Ltd.
Tata Motors Ltd.
UPL Ltd.
Chemicals
Larsen & Toubro Ltd.
Construction
Grasim Industries Ltd.
Construction Materials
UltraTech Cement Ltd.
Asian Paints Ltd.
Consumer Durables
Titan Company Ltd.
Britannia Industries Ltd.
Fast Moving Consumer Goods
Hindustan Unilever Ltd.
ITC Ltd.
Nestle India Ltd.
Tata Consumer Products Ltd.
Axis Bank Ltd.
Financial Services
Bajaj Finance Ltd.
Bajaj Finserv Ltd.
HDFC Bank Ltd.
HDFC Life Insurance Company Ltd.
ICICI Bank Ltd.
IndusInd Bank Ltd.
Kotak Mahindra Bank Ltd.
SBI Life Insurance Company Ltd.
State Bank of India
Apollo Hospitals Enterprise Ltd.
Healthcare
Cipla Ltd.
Divi's Laboratories Ltd.
Dr Reddy's Laboratories Ltd.
Sun Pharmaceutical Industries Ltd.
HCL Technologies Ltd.
Information Technology
Infosys Ltd.
LTIMindtree Ltd.
Tata Consultancy Services Ltd.
Tech Mahindra Ltd.
Wipro Ltd.
Adani Enterprises Ltd.
Metals & Mining
Hindalco Industries Ltd.
JSW Steel Ltd.
Tata Steel Ltd.
Bharat Petroleum Corporation Ltd.
Oil Gas & Consumable Fuels
Coal India Ltd.
Oil & Natural Gas Corporation Ltd.
Reliance Industries Ltd.
NTPC Ltd.
Power
Power Grid Corporation of India Ltd.
Adani Ports and Special Economic Zone Ltd.
Services
Bharti Airtel Ltd.
Telecommunication
The value of NIFTY 50 is calculated using a float-adjusted and market capitalization-weighted methodology. In this approach, the index level reflects the total market value of stocks included in the index during a specific base period. Below is the formula for calculating the Nifty 50 index value:
Index Value = Current Market Value / Base Market Capital x 1000
The index calculation methodology also considers adjustments for corporate actions, including rights issues, stock splits, and other relevant factors.
The table below depicts the weightage of the top 10 stocks in Nifty 50 (as of January 2024):
Stock
Weightage
HDFC Bank
13.26%
Reliance Industries
9.11%
ICICI Bank
7.42%
Infosys
5.89%
ITC
4.39%
L&T
4.26%
TCS
4.05%
Axis Bank
3.38%
Kotak Mahindra Bank
2.93%
Bharti Airtel
2.90%
Yes. You can trade in Nifty 50 through derivatives i.e. Futures and Options (F&O). The prices of these F&O contracts are linked to the value of the Nifty 50 index. The lot size for Nifty 50 for F&O trading is 50 and in multiples thereof.
Nifty 50 comprises 50 top representative stocks from 13 sectors listed on the National Stock Exchange (NSE). Below are the eligibility criteria for stocks to be included in Nifty 50:
The closing price of the Nifty 50 is calculated based on the weighted average market prices of the constituent stocks for the last 30 minutes before market closing, i.e., between 3 PM and 3:30 PM.
The Nifty 50 index depicts the performance of the top 50 stocks listed on the National Stock Exchange (NSE). Hence, you cannot buy or sell Nifty 50 units directly. Nevertheless, you can trade in Nifty 50 derivatives, such as Futures and Options (F&O). Alternatively, you can consider investing in index mutual funds, which are structured to replicate the performance of Nifty 50.
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.