What Is Nifty 50?
This is a series of explainers to educate and inform new investors. In association with Dun & Bradstreet India as knowledge partner.
Nifty 50: Definition, Meaning & Basics
Nifty 50 is a stock market index, which is made of shares of 50 leading well diversified companies in India, representing various sectors of the economy such as financial services, engineering, pharma, information technology, etc.
It uses free float market capitalisation to decide weightage of these 50 stocks.
Nifty 50, as an index, is used for multiple purposes, such as tracking broader market movements, benchmarking fund portfolios, launching of index funds, exchange-traded funds and structured products.
The benchmark is a tradeable index in the derivatives segment.
To become part of Nifty 50, stocks have to meet certain eligibility criteria in terms of liquidity, listing history, etc. New stocks are admitted into Nifty 50, when index rebalancing is done. This is accompanied by exit of some stocks from the index.
Visit the Financial Terms section for more.