Silver Jubilee of Nifty 50 Index

By Meghashyam Sinkar

Last month Nifty 50 Index has completed 25 years of its journey. Over the years, the Nifty 50 has become the most widely used benchmark for exchange traded products on Indian equity market and helping investors gauge the pulse of Indian capital market.

What is Nifty 50 Index?

Nifty 50 Index is a broad-based index consisting of 50 blue-chip large and liquid stocks listed on the National Stock Exchange of India.

Selection is very fare and depend on the large size of Market Capital of the company. It means Nifty is the Group of 50 top largest member Companies of National Stock Exchange. The stocks having largest market cap and largest volume are selected.

 Sector composition of Nifty 50 across years

The Nifty 50 currently has exposure to 13 sectors. Since Nifty 50 index’s inception, the weights of sectors have changed over time due to evolving market dynamics. For example, the IT sector was not represented at the time of inception, but as of December 15, 2021, it represents 17.9% of the weight in the index. Similarly, weights of stocks from the financial services sector have grown from 20% to 37%, while weights of Consumer goods and Metals sectors have declined from 19.0% to 10.8% and 10.9% to 3.4% respectively over the same time period.

Nifty Performance 

All data are as of December 15, 2021.
Returns data is CAGR returns as of Dec 15, 2021

Calendar Year Returns for Nifty 50 TR index

Data for the year 1999 is from Jun 30, 1999 to Dec 30, 1999. *Data for 2021 is till December 15, 2021

Rolling Returns for Nifty 50 TR index

Data as of Dec 15, 2021

Interesting Facts

  • There are below 12 companies that are part of Nifty 50 since inception.
Reliance Industries Ltd.Hindustan Unilever Ltd.Tata Motors Ltd.
HDFC Bank Ltd.ITC Ltd.Tata Steel Ltd.
Housing Development Finance Corporation Ltd.State Bank of IndiaHindalco Industries Ltd.
ICICI Bank Ltd.Bajaj Auto Ltd.Larsen & Toubro Lt

It means that there is a 24% probability of the bluechip company remaining bluechip over a long period of time.

  • Across 25 years, there have been 101 inclusions in Nifty 50, averaging 4 per year.

We can’t ignore the new sectors, new industries and small-sized companies as they might become part of the Nifty 50. In fact, these numbers might change on the higher side considering globalisation, technology, competition, consumer change of preference and behaviour and innovation in the coming few decades.

Key Takeaways

  1. Sector keeps rotating over a period of time.Therefore one should have core portfolio of diversified mutual fund.
  2. Both bull markets and bear markets are a part of the stock market lifecycle.
  3. In short period , the probability of positive as well as negative returns are high on both the side .
  4. As you increase the time horizon / holding period , the probability of negative returns comes down.
  5. If you hold the equity index for 7 years and more , then the probability of losing money is NIL. Click here to know more on it
  6. It is not the timing of the market but the time in market matters . Click here to know more on it.

Happy Investing !!!