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The NIFTY50 (or National Index Fifty index) is the benchmark stock index for the National Stock Exchange of India. It is one of the two key indices used to assess the performance of the Indian economy; the other is the BSE Sensex, which follows the performance of stocks listed on the Bombay Stock Exchange. The NIFTY50 is a free-float market capitalisation weighted index, and includes 50 of the top stocks traded on the National Stock Exchange of India.
This page will give you a brief history of the NIFTY50, let you know how the stocks it tracks are selected, and provide information as to how you can invest in the index.
The NIFTY50 was launched on the 1st April 1996, and is owned and run by India Index Services and Products (IISL) – itself a subsidiary of NSE Strategic Investment Corporation Limited. The index has seen fast growth over time, with a few notable sharp falls such as amid the financial crisis of 2007-08, and as of April 2018 had a market capitalisation of $2.27 trillion.
The index covers 13 sectors of the Indian economy, including pharmaceuticals, banking, and industrial chemicals, and therefore offers a diversified view of the Indian economy as a whole. Some of the most well-known companies tracked by the NIFTY50 are Tata Steel, State Bank of India, and Coal India.
In it’s more than two-decade-long history, the NIFTY50 reached its all-time-high when it closed at 12,355.50 on the 16th January 2020. This was followed by a small drop throughout February, before crashing to 7,610.25 on the 23rd March as the COVID-19 pandemic sent indices across the world into chaos. The NIFTY50 rallied from this point, but it is still unclear what the long term impacts of this crisis will be.
The stocks that make up the NIFTY50 are determined by the company that owns the index, India Index Services and Products (IISL). In order to give an accurate indication of the Indian economy, the NIFTY50 is determined by free-float market capitalisation and is structured to include 50 of the largest and most widely traded stocks on the National Stock Exchange of India.
The NIFTY50 index is the largest single financial product traded in India today, and the easiest way to invest your own money in it is with an exchange-traded fund (ETF). An ETF gives you a diversified investment covering the stocks tracked by the NIFTY50 index, and can be traded on an exchange at any time during trading hours. There are a variety of both onshore and offshore NIFTY50 ETFs to choose from, and investing this way will enable you to profit from increases in the index’s value, while still allowing you to retain the trading flexibility that comes with an individual stock.