Nifty 50 Index: Constituents & Weightage
May 06 , 2023 12:00 PM 0 comments | About :Introduction:
The Nifty 50 index is the benchmark index for the National Stock Exchange of India (NSE), which reflects how well the 50 most successful companies are listed on the stock exchange. The companies chosen are by various factors like liquidity, market capitalization, and trading volume. This post will dive further into Nifty 50, its constituents, and how the weights are determined.
Constituents: The constituents of Nifty 50 are selected according to the following guidelines:
· Market capitalization: Businesses with the highest market capitalization have a higher chance of being chosen over those with smaller market capitalization.
· Corporate governance: Businesses with an established track record of corporate governance and transparency in their business dealings get the upper hand.
· Sector representation: Nifty 50 aims to represent various economic sectors, so companies from various industries are represented.
· Sectors included:
1. Oil Gas & Consumable Fuels
2. Financial Services
3. Information Technology
4. Fast Moving Consumer Goods
5. Construction
6. Telecommunication
7. Consumer Durables
8. Automobile and Auto Components
9. Healthcare
10. Metals & Mining
11. Construction Materials
12. Power
13. Services
14. Chemicals
· Liquidity: Companies with significant trading volumes that can be easily traded are preferred to those that aren't liquid.
Weightage:
The weightage of each constituent calculates the weightage of every constituent of Nifty 50. The nifty 50 index is determined using its market capitalization free float. Free-float market capitalization refers to the capitalization of an organization, not including shares held by promoters and other investors with strategic interests. The formula used to calculate the weightage of each constituent is as the following:
The weightage of an individual constituent = (Free-float market capitalization the sum of free-float capitalizations of the constituents) * 100
The Nifty 50 is composed of 50 stocks with a total market capitalization of 13,507,546.93 crores. March-2023.
Calculating the Index: with example
Stocks A, B, C, D and E from the nifty. the example given below is only for illustration purposes, (all Values in INR).
|
Stock |
Market Cap |
Free-Float Factor |
Free-float Market Cap for Each Stock |
Free-float Calculation |
|
Stock A |
10,000 |
0.90 |
9,000 |
A: 22.96% (9,000 crore / 39,200 crore) |
|
Stock B |
15,000 |
0.80 |
12,000 |
B: 30.61% (12,000 crore / 39,200 crore) |
|
Stock C |
5,000 |
1.00 |
5,000 |
C: 12.76% (5,000 crore / 39,200 crore) |
|
Stock D |
12,000 |
0.70 |
8,400 |
D: 21.43% (8,400 crore / 39,200 crore) |
|
Stock E |
8,000 |
0.60 |
4,800 |
E: 12.24% (4,800 crore / 39,200 crore) |
|
Current Market Value |
|
|
39,200cr |
100% |
Whenever the prices of individual stocks change, their weight in the index value also changes; the current market value of nifty 50 is 13,507,546.93 crores. March-2023.
With the given example above one can understand the calculation of index current value.
Here is the table of WEIGHTAGE of nifty 50 stocks according to the market capitalization.
|
NO. |
COMPANY NAME |
STOCK SYMBOL |
SECTOR |
WEIGHTAGE (%) |
|
1 |
Reliance Industries Ltd. |
RELIANCE |
Oil Gas & Consumable Fuels |
10.5 |
|
2 |
HDFC Bank Ltd. |
HDFCBANK |
Financial Services |
9.23 |
|
3 |
ICICI Bank Ltd. |
ICICIBANK |
Financial Services |
7.81 |
|
4 |
Infosys Ltd. |
INFY |
Information Technology |
7.13 |
|
5 |
Housing Development Finance Corporation Ltd. |
HDFC |
Financial Services |
6.16 |
|
6 |
Tata Consultancy Services Ltd. |
TCS |
Information Technology |
4.45 |
|
7 |
ITC Ltd. |
ITC |
Fast Moving Consumer Goods |
4.35 |
|
8 |
Kotak Mahindra Bank Ltd. |
KOTAKBANK |
Financial Services |
3.38 |
|
9 |
Larsen & Toubro Ltd. |
LT |
Construction |
3.34 |
|
10 |
Axis Bank Ltd. |
AXISBANK |
Financial Services |
2.99 |
|
11 |
Hindustan Unilever Ltd. |
HINDUNILVR |
Fast Moving Consumer Goods |
2.88 |
|
12 |
State Bank of India |
SBIN |
Financial Services |
2.63 |
|
13 |
Bharti Airtel Ltd. |
BHARTIARTL |
Telecommunication |
2.43 |
|
14 |
Bajaj Finance Ltd. |
BAJFINANCE |
Financial Services |
2.13 |
|
15 |
Asian Paints Ltd. |
ASIANPAINT |
Consumer Durables |
1.67 |
|
16 |
Mahindra & Mahindra Ltd. |
M&M |
Automobile and Auto Components |
1.59 |
|
17 |
Maruti Suzuki India Ltd. |
MARUTI |
Automobile and Auto Components |
1.5 |
|
18 |
HCL Technologies Ltd. |
HCLTECH |
Information Technology |
1.49 |
|
19 |
Sun Pharmaceutical Industries Ltd. |
SUNPHARMA |
Healthcare |
1.35 |
|
20 |
Titan Company Ltd. |
TITAN |
Consumer Durables |
1.3 |
|
21 |
Tata Steel Ltd. |
TATASTEEL |
Metals & Mining |
1.1 |
|
22 |
UltraTech Cement Ltd. |
ULTRACEMCO |
Construction Materials |
1.1 |
|
23 |
NTPC Ltd. |
NTPC |
Power |
1.06 |
|
24 |
Tata Motors Ltd. |
TATAMOTORS |
Automobile and Auto Components |
0.99 |
|
25 |
Power Grid Corporation of India Ltd. |
POWERGRID |
Power |
0.99 |
|
26 |
Bajaj FinServ Ltd. |
BAJAJFINSV |
Financial Services |
0.95 |
|
27 |
IndusInd Bank Ltd. |
INDUSINDBK |
Financial Services |
0.92 |
|
28 |
Tech Mahindra Ltd. |
TECHM |
Information Technology |
0.9 |
|
29 |
Nestle India Ltd. |
NESTLEIND |
Fast Moving Consumer Goods |
0.87 |
|
30 |
JSW Steel Ltd. |
JSWSTEEL |
Metals & Mining |
0.82 |
|
31 |
Grasim Industries Ltd. |
GRASIM |
Construction Materials |
0.78 |
|
32 |
Oil & Natural Gas Corporation Ltd. |
ONGC |
Oil Gas & Consumable Fuels |
0.78 |
|
33 |
Hindalco Industries Ltd. |
HINDALCO |
Metals & Mining |
0.76 |
|
34 |
Wipro Ltd. |
WIPRO |
Information Technology |
0.75 |
|
35 |
Dr. Reddy’s Laboratories Ltd. |
DRREDDY |
Healthcare |
0.69 |
|
36 |
Britannia Industries Ltd. |
BRITANNIA |
Fast Moving Consumer Goods |
0.69 |
|
37 |
SBI Life Insurance Company Ltd. |
SBILIFE |
Financial Services |
0.66 |
|
38 |
Cipla Ltd. |
CIPLA |
Healthcare |
0.64 |
|
39 |
HDFC Life Insurance Company Ltd. |
HDFCLIFE |
Financial Services |
0.63 |
|
40 |
Coal India Ltd. |
COALINDIA |
Oil Gas & Consumable Fuels |
0.59 |
|
41 |
Adani Ports and Special Economic Zone Ltd. |
ADANIPORTS |
Services |
0.59 |
|
42 |
Apollo Hospitals Enterprise Ltd. |
APOLLOHOSP |
Healthcare |
0.59 |
|
43 |
Eicher Motors Ltd. |
EICHERMOT |
Automobile and Auto Components |
0.57 |
|
44 |
Tata Consumer Products Ltd. |
TATACONSUM |
Fast Moving Consumer Goods |
0.57 |
|
45 |
Bajaj Auto Ltd. |
BAJAJ-AUTO |
Automobile and Auto Components |
0.54 |
|
46 |
Adani Enterprises Ltd. |
ADANIENT |
Metals & Mining |
0.49 |
|
47 |
UPL Ltd. |
UPL |
Chemicals |
0.48 |
|
48 |
Divi’s Laboratories Ltd. |
DIVISLAB |
Healthcare |
0.47 |
|
49 |
Hero MotoCorp Ltd. |
HEROMOTOCO |
Automobile and Auto Components |
0.41 |
|
50 |
Bharat Petroleum Corporation Ltd. |
BPCL |
Oil Gas & Consumable Fuels |
0.41 |
Let's examine the weightage of the top 5 stocks: Reliance Industries, HDFC Bank Ltd, ICICI Bank Ltd, Infosys Ltd, and Housing Development Finance Corporation Ltd. We can observe that they collectively account for 40% of the total weightage of nifty, implying that these stocks can potentially influence the movement of nifty 50 significantly.
SUMMARY
• The Nifty 50 index serves as the benchmark index for the National Stock Exchange of India (NSE) and indicates the performance of the 50 most successful companies listed on the stock exchange.
• We will teach you how aspects such as market capitalization, corporate governance, sector representation, and liquidity contribute to the constituents of Nifty 50.
• We will explain the weightage of each constituent calculation and how every constituent of Nifty 50 is weighted based on its market capitalization free float with examples.
• We will provide you with the formula used to calculate the weightage of each constituent.
• We will explain how the stock's weightage changes when the price of the individual stock changes.
• As of March 2023, the current market value of Nifty 50 is 13,507,546.93 crores.