What is NIFTY 50 and How it is calculated?
- National Stock Exchange Fifty (NIFTY 50).
- NIFTY 50 is an equity benchmark index which was introduced by National Stock Exchange (NSE).- NIFTY 50 index is 50 well diversified company’s stock that reflect the overall market condition.
Now the biggest question-Which stock is eligible for selection into NIFTY 50 index?
Eligibility:
-Minimum 6 months listing history (company comes out
with an IPO, and fulfill normal eligibility criteria for the index for 3 month
is also eligible).
-Company should allow trading in
F&O segment.
-The stock should trade at an
average impact cost of 0.50% or less
during the last six month for 90% of the observations, for the basket size of
Rs. 10 crore.
What is Impact Cost:
In mathematical terms Impact Cost is the percentage mark up
observed while buying / selling the desired quantity of a stock with reference
to its ideal price (best buy + best sell) / 2.
Example:
Suppose you want to buy 1500 shares and the available bids in the
market are as under:
Buy qty
|
Buy price
|
Sell qty
|
Sell price
|
1000
|
98
|
1000
|
99
|
2000
|
97
|
1500
|
100
|
1000
|
96
|
1000
|
101
|
To buy 1500 shares
Ideal Price = 99+98/2 = 98.50
Actual Buy Price = [(1000*99)+(500*100)]/1500 = 99.33
Impact Cost = (99.33-98.80)/ 98.50 = 0.84%
Sector representation in NIFTY 50
FINANCIAL SERVICES
|
41.50
|
ENERGY
|
13.66
|
IT
|
13.17
|
CONSUMER GOODS
|
11.60
|
AUTOMOBILE
|
5.66
|
CONSTRUCTION
|
3.42
|
METALS
|
2.95
|
TELECOM
|
2.67
|
PHARMA
|
2.17
|
CEMENT & CEMENT PRODUCTS
|
1.63
|
FERTILISERS & PESTICIDES
|
0.59
|
SERVICES
|
0.58
|
MEDIA & ENTERTAINMENT
|
0.41
|
Top Stocks with weightage:
Company
|
Weight (%)
|
10.73
|
|
9.23
|
|
8.42
|
|
6.87
|
|
5.75
|
|
4.58
|
|
4.42
|
|
4.15
|
|
3.42
|
|
3.28
|
Portfolio Characteristics:
Methodology
|
Free Float Market
Capitalization wherein the level of index reflects the free
float market capitalisation of all stocks in Index.
|
No. of Constituents
|
50
|
Launch Date
|
April 22, 1996
|
Base Date
|
November 03, 1995, which marks the completion of one year of operations of
NSE's Capital Market Segment.
|
Base Value
|
1000
|
Calculation
Frequency
|
Real-Time Daily
|
Index Rebalancing
|
Semi-Annually, January
31 and July 31 of each year
|
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