Why I’ve Started Investing In The Nifty 50 Index Fund

The Nifty 50 Index is a stock market index in India that represents the performance of 50 of the largest and most actively traded companies listed on the National Stock Exchange of India (NSE). It is computed using free float market capitalization weighted methodology, where the level of the index reflects the total market value of all the stocks in the index relative to a particular base period. The Nifty 50 Index is widely followed by investors in India and is considered to be a benchmark index for the Indian stock market.

An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Nifty 50. Index funds aim to replicate the performance of the underlying index as closely as possible. They offer investors exposure to a diverse range of stocks in a single investment vehicle, providing diversification and the potential for long-term capital appreciation.

Investing in an Nifty 50 index fund can be a convenient and cost-effective way for investors to gain exposure to the Indian stock market. Index funds typically have lower fees than actively managed funds, as they do not require a team of fund managers to research and select individual stocks. This can result in higher returns for investors over the long term.

However, it is important to note that the performance of an index fund is dependent on the performance of the underlying index. If the Nifty 50 index performs poorly, the fund's returns may also be affected. It is also important for investors to understand the specific holdings and weightings of the fund and how they align with their investment objectives.

In summary, the Nifty 50 Index is a widely followed stock market index in India, representing the performance of 50 of the largest companies listed on the NSE. An Nifty 50 index fund is a type of investment vehicle that tracks the performance of the index, providing investors with diversified exposure to the Indian stock market. Index funds may offer lower fees and the potential for long-term capital appreciation, but the performance of the fund is dependent on the underlying index and it is important for investors to understand the specific holdings and weightings of the fund.

1. NIFTY is a market index, a Bench Mark for the Top 50 companies listed by NSE.

2. In the index it will look top 50 companies performance.

3. Performance will be calculated based on the market capital (cap)-weighted methodology in the Top 50 companies as below.

The below table will let you know the top 50 companies and their Market capital (Cap)

COMPANY INDUSTRY MARKET CAP

ADANI PORTS & SEZ MISCELLANEOUS 1,748,221.00

ASIAN PAINTS PAINTS 2,931,213.00

AXIS BANK BANKING 2,862,776.00

BAJAJ FINANCE FINANCE 3,975,208.00

BAJAJ FINSERV FINANCE 252,567.00

BHARTI AIRTEL TELECOM 4,488,560.00

BPCL ENERGY 741,342.00

BRITANNIA FOOD BEVERAGES 1,070,587.00

CIPLA PHARMA 878,552.00

COAL INDIA MINING 1,384,457.00

DIVIS LABORATORIES PHARMA 883,187.00

DR. REDDYS LAB PHARMA 716,595.00

EICHER MOTOR AUTO 899,411.00

GRASIM TEXTILES 1,155,592.00

HCL TECHNOLOGIES SOFTWARE 2,794,125.00

HDFC FIN. INSTITUTIONS 4,801,933.00

HDFC BANK BANKING 9,030,630.00

HDFC LIFE INSURANCE INSURANCE 1,162,166.00

HERO MOTOCORP AUTO 544,337.00

HINDALCO ALUMINIUM 1,026,127.00

HUL FMCG 6,276,370.00

ICICI BANK BANKING 6,227,132.00

INDUSIND BANK BANKING 930,898.00

INFOSYS SOFTWARE 6,483,945.00

IOC OIL & GAS 724,420.00

ITC FMCG 4,123,444.00

JSW STEEL STEEL 1,797,083.00

KOTAK MAHINDRA BANKING 3,645,170.00

L&T ENGINEERING 3,054,258.00

M&M AUTO 1,555,980.00

MARUTI SUZUKI AUTO 2,563,391.00

NESTLE FOOD BEVERAGES 1,903,121.00

NTPC POWER 1,646,494.00

ONGC ENERGY 1,851,817.00

POWER GRID POWER 1,115,375.00

RELIANCE IND. ENERGY 17,348,761.00

SBI BANKING 5,384,664.00

SBI LIFE INSURANCE INSURANCE 1,254,200.00

SUN PHARMA PHARMA 2,384,099.00

TATA CONSUMER FOOD BEVERAGES 738,670.00

TATA MOTORS AUTO 1,302,311.00

TATA STEEL STEEL 1,356,509.00

TCS SOFTWARE 12,158,665.00

TECH MAHINDRA SOFTWARE 987,546.00

TITAN CONSUMER DURABLES 2,204,240.00

ULTRATECH CEMENT CEMENT 2,024,528.00

UPL CHEMICALS 588,659.00

WIPRO SOFTWARE 2,227,553.00

4. Any large-cap company market cap increase will impact the overall performance of the Nifty 50 index and small-cap will affect low. There is huge possibility small cap will grow more in the upcoming years

5. If (ADANI PORTS & SEZ) or xxx company moves by 10% then The Nifty will move by 42.01 points OR 0.22% (Based on market cap)

6. Index fund is Passive and looking its benchmark, so no one is required to manage it, and the expense ratio will be less compared to the Actively managing mutual fund.

7. Suitable for long-term investment (for a longer period compound interest increases profit in a short period) eg. min 10 years and max 15+ years. (The amount to invest and brokerage will be discussed in an upcoming follow-up blog).

8. You will get high profit based on the performance of the Nifty 50 and it’s also subject to market risk.