about Nifty

The NIFTY 50 index is a well-diversified 50 companies index reflecting overall market conditions. NIFTY 50 Index is computed using free float market capitalization method.

NIFTY 50 can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs and structured products.

Methodology Free Float Market Capitalization
No. of Constituents 50
Launch Date April 22, 1996
Base Date November 03, 1995
Base Value 1000
Calculation Frequency Real-Time Daily
Index Rebalancing Semi-Annually

Index Methodology

Eligibility Criteria for Selection of Constituent Stocks: i.   Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for possible inclusion into the NIFTY50, have traded at an average impact cost of 0.50% or less during the last six months for 90% of the observations, for the basket size of Rs. 100 Million. ii.  The company should have a listing history of 6 months. iii. Companies that are allowed to trade in F&O segment are only eligible to be constituent of the index. iv. A company which comes out with an IPO will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.

Index Re-Balancing: Index is re-balanced on semi-annual basis. The cut-off date is January 31 and July 31 of each year, i.e.  For semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of change.

Index Governance: A professional team manages all NSE indices. There is a three-tier governance structure comprising the Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.

Return of Nifty as on October 31, 2019 is depicted in table below:

Index Returns (%) QTD YTD 1 Year 5 Years Since Inception
Price Return 4.56 9.34 14.35 7.37 10.86
Total Return 4.75 10.7 15.93 8.76  

At same time we need to remember that above return is calculated for existing stocks there was many stocks which have given bad performance and out of Index in rebalancing process.

List of Current Nifty stock is as follows:

NIFTY 50 Since When last inclusion
ADANIPORTS 28-09-2015
ASIANPAINT 27-04-2012
AXISBANK 27-03-2009
BAJAJ-AUTO 01-10-2010
BAJAJFINSV 02-04-2018
BAJFINANCE 29-09-2017
BHARTIARTL 01-03-2004
BPCL 28-10-2002
BRITANNIA 29-03-2019
CIPLA 07-10-1998
COALINDIA 10-10-2011
DRREDDY 01-10-2010
EICHERMOT 01-04-2016
GAIL 02-05-2003
GRASIM 02-04-2018
HCLTECH 28-10-2002
HDFC 03-11-1995
HDFCBANK 03-11-1995
HEROMOTOCO 07-10-1998
HINDALCO 03-11-1995
HINDUNILVR 03-11-1995
ICICIBANK 03-11-1995
INDUSINDBK 01-04-2013
INFRATEL 01-04-2016
INFY 07-10-1998
IOC 31-03-2017
ITC 03-11-1995
JSWSTEEL 28-09-2018
KOTAKBANK 08-04-2010
LT 03-11-1995
M&M 18-09-1996
MARUTI 01-03-2004
NESTLEIND 27-09-2019
NTPC 24-09-2007
ONGC 12-04-2004
POWERGRID 14-03-2008
RELIANCE 03-11-1995
SBIN 03-11-1995
SUNPHARMA 17-01-2002
TATAMOTORS 03-11-1995
TATASTEEL 03-11-1995
TCS 25-02-2005
TECHM 28-03-2014
TITAN 02-04-2018
ULTRACEMCO 28-09-2012
UPL 29-09-2017
VEDL 26-05-2017
WIPRO 17-01-2002
YESBANK 27-03-2015
ZEEL 19-09-2014

Besides this following is list of past nifty stock:

ABB India Ltd.
ACC Ltd.
Ambuja Cements Ltd.
Andhra Valley Power Supply Co. Ltd.
Apollo Tyres Ltd.
Arvind Mills Ltd
Ashok Leyland Ltd.
Aurobindo Pharma Ltd.
Bank of Baroda
Bank of India
Bharat Heavy Electricals Ltd.
Bosch Ltd.
Brooke Bond Lipton India Ltd.
Cairn India Ltd.
Castrol (India) Ltd.
Chambal Fertilizers & Chemicals Ltd.
Colgate Palmolive (I) Ltd
Dabur India Ltd.
Digital Globalsoft Ltd.
DLF Ltd.
EIH Ltd.
Essar Gujarat Ltd.
GlaxoSmithkline Consumer Healthcare Ltd.
Glaxosmithkline Pharmaceuticals Ltd.
Great Eastern Shipping Company Limited.
HCL Infosystems Ltd.
Hindustan Petroleum Corporation Ltd.
Idea Cellular Ltd.
IDFC Ltd
Indiabulls Housing Finance Ltd.
Indian Aluminium Co. Ltd.
Indian Hotels Co. Ltd.
Indian Petrochemicals Corporation Ltd.
Indian Rayon & Industries Ltd.
Indo Gulf Corporation Ltd.
Industrial Development Bank of India Limited
Industrial Finance Corporation Of India Ltd.
Jaiprakash Associates Ltd.
Jet Airways (India) Ltd.
Jindal Steel & Power Ltd.
Kochi Refineries Ltd.
Lupin Ltd.
Madras Refineries Ltd.
Mahanagar Telephone Nigam Ltd.
Mangalore Refinery & Petrochemicals Ltd.
Nagarjuna Fertilizers & Chemicals Ltd.
National Aluminium Co. Ltd.
NIIT Ltd.
NMDC Ltd.
Novartis India Ltd.
Oriental Bank of Commerce
Ponds (India) Ltd.
Procter & Gamble India Ltd.
Punjab National Bank
Ranbaxy Laboratories Ltd.
Reckitt Benckiser (India) Ltd
Reliance Capital Ltd.
Reliance Communications Ltd.
Reliance Infrastructure Ltd.
Reliance Petroleum Ltd.
Reliance Power Ltd.
Satyam Computer Services Ltd.
SCICI Ltd.
Shipping Corporation of India Ltd.
Siemens Ltd.
Steel Authority of India Ltd.
Sterlite Industries (India) Ltd.
Suzlon Energy Ltd.
Tata Chemicals Ltd.
Tata Communications Ltd.
Tata Power Co. Ltd.
Tata Tea Limited
Thermax Ltd.
TVS Suzuki Ltd.
Unitech Ltd.
United Spirits Ltd.

Now in above list there are companies such as Unitech, Suzlon, JP Associates ect.  Who has drastically erosion the wealth of Investor.

What to Do

So best strategy will be to be remain in front liners of Nifty Stocks, someone may decide to hold these stocks till they are part of Index and come out of it as soon as stock is out from Index. It has been seen from past experience that upcoming Nifty stock (Stock which intend to introduce in Index or just introduced stocks) give good return in short run.