What is Nifty 50?
The Nifty 50 refers to the 50 leading stocks listed on the National Stock Exchange (NSE) in India. It is a diversified market index consisting of large-cap and blue-chip stocks from across various sectors, engineered to provide an insight into the Indian stock market environment. The index is well-known for its highly liquid trading stocks and long-term value investing opportunities.
How to invest in Nifty 50?
Investing in the Nifty 50 can be an excellent way to boost your returns. To get started, you need to open a Demat account with a broker and make sure you have enough funds available. Once that's done, determine how much you want to invest and research the companies included in the Nifty 50 index. Furthermore, track your investments regularly and adjust them as needed, to remain one step ahead of any unexpected changes.
NIFTY vs SENSEX
The Nifty and Sensex are both stock market indices in India, however, the two serve vastly different purposes. The Nifty is a market capitalization-weighted index representing the top 50 liquid stocks traded on the National Stock Exchange (NSE). The Sensex, in contrast, is a free float-based index that comprises 30 major companies listed on the Bombay Stock Exchange (BSE).
Furthermore, another key difference between these two indices is that while both track blue chip companies in India, their methods for selecting them to vary slightly. The Nifty 50 consists primarily of market capitalization-weighted companies selected by a committee formed by India Index Services & Products Ltd., whereas members of the Sensex are determined based on proprietary criteria created by Standard & Poor's and BSE Ltd.
Another difference is that while both indices use free float methodology for determining weights assigned to their constituent stocks; the method used by Nifty 50 assigns greater weight to larger companies compared to how much weight those same companies receive under Sensex's methodology.