The NIFTY 50 index is a well-diversified 50 companies index reflecting overall market conditions. NIFTY 50 Index is computed using the free-float market capitalization method.
NIFTY 50 can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs and structured products.
Eligibility Criteria for Selection of Constituent Stocks:
1. Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for possible inclusion into the NIFTY50, have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations, for the basket size of Rs. 100 Million.
2. The company should have a listing history of 6 months.
3. Companies that are allowed to trade in F&O segment are only eligible to be constituent of the index.
4. A company which comes out with an IPO will be eligible for inclusion in the index if it fulfils the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.
The index is re-balanced on a semi-annual basis. The cut-off date is January 31 and July 31 of each year, i.e. For a semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of the change.
A professional team manages all NSE indices. There is a three-tier governance structure comprising the Board of Directors of NSE
Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.
Facts as of 31st of March 2020
Her is the detailed breakdown of all the Nifty 50 companies. Sectoral weight-age has remained largely similar and the constituent companies have constantly changed.
1 : Financial Sector, Consumer Goods and IT Sector contribute 66% Weightage in Index.
2 : Financial Sector – 36.51% , Information Technology – 15.02, Consumer Goods – 14.46%.
3 : There are only 3 Pharmaceutical companies. India is amongst the biggest pharmaceutical exporters in the world.
|Oil & Gas||12.44|
|Cement & Cement Products||2.22|
|Fertilisers & Pesticides||0.50|
|Media & Entertainment||0.32|
Updated Date: 3rd of April 2020.
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