Explained: What are you investing in when you’re investing in Nifty50

Explained: What are you investing in when you’re investing in Nifty50
Seven companies account for nearly half of the Nifty50 weightBCCL
  • There are several ways of investing in the Nifty50 index, with index funds being the most popular and passive way of doing it.
  • But did you know that two sectors and seven companies contribute nearly half to the entire Nifty50 index?
  • Here’s everything you need to know about the Nifty50 index.
Indian equity markets have seen an unprecedented rally after the post-Covid crash in 2020, and this has resulted in an explosion in the number of demat accounts – there are now over 100 million demat accounts in India.

If you are an investor who wants to play it relatively less risky when compared to individual equities, experts and investment advisors have often recommended investing in Nifty50 index funds. What these funds do is allocate their assets in the same proportion as the underlying index. These are passive funds and have a certain expense attached to them.

But what is the Nifty50 index and which are the stocks included in the Nifty50 index? Here’s an explainer to help you understand it.

What is the Nifty50 index?

The Nifty50 is a benchmark index comprising India's top 50 large cap companies. As a result, only the biggest companies are included in this index.


Companies in the Nifty50 index are selected based on four criteria – they should be listed on NSE, their free-float market cap, and their shares should be easily available for trading.

Overall, the Nifty50 index currently has a free-float market cap of over ₹75.5 lakh crore.

NSE rebalances the Nifty50 index two times a year – the most recent rebalancing resulted in the addition of Adani Enterprises to the index, replacing Shree Cements.

The biggest component of Nifty50 remains Reliance, weighing over a tenth of the entire index on its own.

The HDFC twins merger is expected to overshadow the inclusion of Adani Enterprises come September 30. “The HDFC merger will likely result in an unprecedented around 14% of the Nifty50 weight getting replaced by two new incoming stocks with a combined weight of around 1% and the remaining 13% weight getting distributed amongst the existing 48 stocks,” said a report by ICICI Securities, adding that this could result in buying and selling worth ₹48,000 crore.


The top seven companies make up half of the Nifty50 index

Investing in and tracking 50 companies might be a difficult task, but did you know you could gain exposure to half of the Nifty50 index in terms of weightage by investing in just seven companies?

Here’s how.

Explained: What are you investing in when you’re investing in Nifty50
Nifty50 components Sept 2022Business Insider India / Flourish

These two sectors account for half of the Nifty50 index

Unsurprisingly, financials and IT sectors together account for over half of the total Nifty50 index.

Explained: What are you investing in when you’re investing in Nifty50
Nifty50 sector wise weightage Sept 2022Business Insider India / Flourish

Here’s the full list of Nifty50 stocks with their weightage

StockIndex weightStockIndex weight3
Reliance Industries11.71UltraTech Cement0.97
HDFC Bank8.67Nestle India0.91
ICICI Bank8.01Adani Ports0.88
Infosys6.86Tech Mahindra0.87
HDFC5.85Indusind Bank0.81
ITC3.65HDFC Life Insurance0.77
Kotak Mahindra Bank3.58Hindalco0.77
Larsen & Toubro3.07Grasim0.77
Hindustan Unilever3.04JSW Steel0.75
Axis Bank2.89SBI Life Insurance0.74
Bajaj Finance2.29Tata Consumer0.66
Bharti Airtel2.28Dr Reddy's Labs0.66
Asian Paints1.82ONGC0.65
Maruti Suzuki India1.56Coal India0.65
M&M1.55Bajaj Auto0.62
HCL Tech1.31Divi's Labs0.60
Titan1.29Apollo Hospitals0.59
Sun Pharma1.24Eicher Motors0.58
Bajaj Finserv1.20Britannia0.57
Tata Steel1.11UPL0.52
Tata Motors1.06Hero MotoCorp0.48
Power Grid1.01Shree Cement0.28

Source: NSE


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