Hello friends, welcome to Jankarime.com, Today we will tell about Nifty 50 in this post, what is Nifty? How to choose stocks in Nifty? What are the futures of Nifty? Do Nifty shares keep changing? So let’s know about Nifty.
What is Nifty 50?
Nifty is made up of two words National and Fifty. It is also called Nifty 50 because it consists of 50 shares and these 50 shares together make up Nifty.
It is an important benchmark index of NSE (National Stock Exchange). Nifty is an index of 50 major stocks listed on NSE.
The movement of the market is known only by the movement of Nifty. Nifty is the most traded in the stock market. There are 50 shares in Nifty because the number of shares in the index is decided by the exchange.
More than 1600 companies are registered in the NSE, out of which the largest and financially strong companies of 50 different sectors of the country are selected to be indexed in Nifty. For example, banks, metals, pharma companies, media, IT (Information Technology) etc.
Nifty consists of stocks from different sectors. Some sectors may have more shares and some sectors may not have a single share. But there cannot be shares of the same sector like metal, IT, bank, pharma etc. There are different companies but overall there are only 50 companies in Nifty.
History of Nifty 50–
Nifty started from April 1996, but its base year was 1995. Index futures based on Nifty 50 were introduced on 12 June 2000 and trading in Nifty Options started on NSE on 4 June 2001.
In 1995, the base value of 50 Nifty companies was considered to be 1000. Although at that time the base value of 50 companies in Nifty was around 2 lakh crores. If a value of ₹ 2 lakh crore and an index of ₹ 2 lakh crore were made, then such an index could not be counted.
When Nifty was formed in the year 1995, 50 companies of nifty together were worth ₹ 2 lakh crore and today only one company TCS (Tata Consultancy Services) is worth ₹ 7 lakh crore.
At that time the market of 50 companies was around ₹ 2 lakh crore, the index made by combining them was the base value of 1000. The Nifty which was 1000 in 2005 is around 11000 today. That is, between 1995 and 2018, the value of Nifty has increased almost 11 times. Its value became US$2.27 trillion in April 2018.
Do Nifty shares keep changing?
The shares of Nifty keep changing from time to time. Usually rebalancing of Nifty is done twice a year. This is also called Manually. Rebalancing of Nifty takes place twice a year in January and July.
Rebalancing is done to see if there is a need to make some changes in the Nifty. So two changes are made in a year. As soon as these changes happen, March and September do not work, which is the expiry of futures trading on the last Thursday of every month. If Thursday is a holiday, it happens on the next Thursday.
Fruit names and their benefits
On the next day i.e. the day of the month of April and October, the changes of Nifty are implemented on that day. The exchange releases the list of changes in Nifty 4 weeks in advance. There is definitely change in Nifty. Shares also come in and exit the Nifty.
How are shares selected in Nifty?
• Only the company can come in Nifty which is a company of India or the company which is registered in India. That is, there should be a share of an Indian company listed on NSE (National Stock Exchange).
• Futures trading stocks of Nifty 100 index can come in nifty 50. If one is not in futures trading then he/she cannot get into Nifty. All the trading in nifty is part of futures trading. The smallest Nifty company needs to have a market cap of 1.5 times the free-float market cap. That is, if there are 50 companies, then there will not be 51 companies in it because only 50 companies have shares in nifty, then the company which has to enter Nifty should be 1.5 times bigger than the companies numbered 48, 49 or 50 from the bottom.
• The newly listed company has to fulfill the conditions for 3 months instead of 6 months. Shares should be trading daily in the last 6 months. A company can join Nifty only after fulfilling these criteria.
What are the futures of Nifty?
There are two types of nifty futures- Index futures and stock futures.
• Index Futures – Index futures are valued based on the index.
• Stock Futures- Stock futures are valued based on the share price.
We are talking about nifty, nifty is an index and futures of the index are trending and there are deals in them. At present the most popular or active futures in the market is Nifty. After that the second most popular and active futures is Nifty Bank.
After that some popular teas are in Nifty IT. Liquidity is high in Nifty and Nifty Bank. Index futures listed on NSE are 9. But the most famous and liquid indices are Nifty 50, Nifty Bank and Nifty IT. Most of the work is done in Nifty and Nifty Bank.
The 50 companies that are there in Nifty, these 50 companies are about two-thirds of the total market value, that is, 65%-66% of the value is only of these 50 companies. Every company has a different value. The value of a company is high and the value of a company is low.
Friends, in today’s post, it was told about Nifty, what is Nifty? How to choose stocks in Nifty? Full details are given. If you liked this post, then do share it with your friends and others.
