What Is Nifty?

In today’s rapidly evolving financial landscape, market indices play a significant role as benchmarks by giving investors a snapshot of market trends and performances. NIFTY (launched by the National Stock Exchange) and SENSEX (Launched by the Bombay Stock Exchange) are the two prominent stock market indices in India.

This article answers the question, “what is Nifty?”

Explaining Nifty

Nifty, the short form for National Stock Exchange Fifty, is a market index that was launched by the National Stock Exchange. It serves as a benchmark index for various financial products and the Indian equity market, as it helps to gauge the overall health of the Indian economy. Nifty is owned as well as managed by NIL, NSE Indices Limited and this was erstwhile known as IISL, i.e. India Index Services & Products Limited. There are over 350 indices managed by NSE Indices Limited under the brand name ‘Nifty’. This includes Nifty 50, Nifty Next 50, Nifty 100, Nifty Bank, Nifty 500, Nifty Healthcare, Nifty IT, and more.

What is Nifty 50?

Nifty 50 is the index that comprises of top 50 large and liquid stocks traded on the National Stock Exchange. The Nifty 50 was launched by NSE on the 22^nd of April, 1996, which has evolved over the last 27 years and has embraced global best practices. Here are the top 12 companies that have been part of Nifty 50 since its inception.

So, if you want to know what is Nifty 50, just understand that it comprises the top 50 diverse stocks from 13 different sectors constituting about 59% of the free float market capitalisation of the stocks listed on NSE as of 29^th September 2023. Online stock brokers help you trade in these top 50 stocks with ease.

Also read: How to start trading in stock market?

Eligibility to get listed on Nifty Index

To get included in the NIFTY index, companies need to meet the stringent eligibility criteria set by the National Stock Exchange. Factors like liquidity, market capitalisation, company track record, financial performance, sector representation, regulatory compliance, and other listing requirements are checked. The companies can be added/removed based on these factors on a time-to-time basis.

The Nifty 50 index is reconstituted semi-annually after considering the stock performance over this period. The index is constructed on the free-float market capitalisation method. You can easily invest in Nifty stocks through online stock brokers.

Also read: Navigating the stock market

Significant events of Nifty

Conclusion

To sum up, as Nifty is one of the two prominent stock market indices in India, serves as a benchmark for gauging the market performance. The diverse composition of stocks from various sectors in Nifty gives investors a deep insight into the country's economic landscape, helps manage risks and makes an informed decision.