All About NIFTY 50

During the 1960s and 1970s, the Nifty 50 was a collection of fifty popular large-cap stocks that traded at high valuations, including popular household names like Xerox (XRX), IBM, Polaroid, and Coca-Cola (KO). Since the Nifty Fifty were proven to have rapid growth and continued dividend increases, they were viewed as a “one-decision” pick: investors were encouraged to buy and never sell them.

The NIFTY 50 is one of the two main stock indices used in India, along with the BSE SENSEX. In other words, it measures the performance of 50 of the largest companies listed on the National Stock Exchange.

P/E ratios at the time were as high as 100 times earnings, propelling the bull market before collapsing in the bear market. That decade was marked by political scandal and rising oil prices. With the emergence of the NIFTY 50 index on the National Stock Exchange of India, the Nifty 50 took on a new meaning in 1996.

NIFTY 50

Companies

As there was no official listing, there was no definitive list of the companies that comprised the Nifty 50. A few common characteristics were strong balance sheets, growth that was a consistent and global reach. The NIFTY 50 index tracks 13 sectors of the Indian economy: financial services, computer software, consumer goods, oil and gas, automobiles, telecommunications, construction, pharmaceuticals, metals, power, cement and cement products, fertilizers.

Management

Managing Nifty 50 is by NSE Indices (formerly known as India Index Services and Products Limited), that is a wholly-owned subsidiary of NSE Strategic Investment Corporation Limited. The Nifty 50 index was launched on 22 April 1996 and has been one of Nifty’s stock indexes since 1996. Standard & Poor’s gained a marketing and licensing agreement with NSE Indices until 2013.

Calculation

This is a free-float weighted index, based on market capitalization, which was originally calculated using a full market capitalization methodology; however, on 26 June 2009, the index was recalculated using a free-float methodology. In 1995 the National Stock Exchange Equity Market Segment completed its inaugural year of operations, marking the beginning of the NIFTY 50 index. The base value of the index has been set at 1000 and the base capital at 2.1 trillion.

NIFTY NEXT 50

In NIFTY Next 50, also called NIFTY Junior, are 50 companies whose free-float market capitalization follows that of the companies in NIFTY 50. NIFTY Next 50 constituents are therefore likely to be included in NIFTY 50 in the future.

A well-diversified index of the top 50 companies on the NSE is the Nifty 50. It is considered the benchmark of the National Stock Exchange. It consists of free-float market capitalization figures of the top 50 companies that are traded on the exchange. According to this measure, the broader economy as a whole and the listed universe of Indian companies in all market conditions are considered healthy. Many websites provide regular updates about the developments in stock exchanges. 5paisa is a renowned name in that sphere. You must make informed decisions while investing.