In any capitalistic economy, the stock market plays a vital role. It is that market where both individual and institutional investors alike, trade stocks, bonds, and shares with each other. The stock market determines the market value of stocks and shares to be traded, based on consumer demand. Most trading occurs digitally today due to convenience.
Primary and Secondary Markets
To understand how Nifty works, we should understand what types of market are currently in function and how the work:
The primary market is that market where securities are created initially. Companies float their stocks and shares to the general crowd for the first time in these markets. An IPO is one such example, and private companies selling their stocks for the first time use IPO’s.
Other types of primary markets involve rights offering, private placement, and public allotment.
The secondary market, also more commonly called as the stock market, is where investors trade their stocks and shares amidst other investors instead of the company selling the product. Anyone who has a share in a company can sell to another investor without the company’s involvement.
Bondholders sell bonds for a neat profit on the stock market because of a higher coupon rate.
What is Nifty50?
Two major players of the Indian stock market are The BSE-Bombay Stock Exchange and The NSE-National Stock Exchange. Nifty is the flagship benchmark index of the National Stock Exchange and was initially introduced in 1996. Nifty comes from the combination of the words National and Fifty, the latter reflecting on the weightage of 50 of India’s most successful companies. Nifty share prices are supposed to reflect on the broader economy today seeing how it depends on how well these companies are doing.
The index of Nifty is computed using the free-float market capitalization method, which is the count of shares actively being circulated in the market at a given point. It is used for benchmarking returns of mutual funds, portfolios, and launching index funds.
Nifty50 is managed by India Index Services and Products Limited or IISL which is a subsidiary of the NSE. Nifty’s index is balanced semi-annually by IISL with the cutoff dates being January and July 31st each year. Changes in the index are notified to the exchange four weeks before the change can take effect.
Nifty comprises fifty actively traded stocks on a general basis, with the current exception of 51 stocks. It is also called as CXN Nifty.
Companies associated with Nifty50
Companies that are a part of Nifty share characteristics that are similar, strong balance sheets, global reach and constant progress are a few. Morgan Gauranty Trust has given out its own list of Nifty50, with companies like:
- Reliance Industries Ltd.
- HDFC Bank Ltd.
- ICICI Bank Ltd.
- Tata Consultancy Services Ltd.
- Housing Development Fin. Corp. Ltd.
- Kotak Mahindra Bank Limited
- Hindustan Unilever Ltd.
- Axis Bank Ltd.
- Infosys Limited
- ITC Ltd.
- Maruti Suzuki India Limited
- Bharti Airtel Ltd.
- Asian Paints Limited
- Shree Cement Ltd.
- Titan Company Ltd.
- Larsen and Toubro Ltd.
- Bajaj Finserv Ltd.
- Bajaj Finance Ltd.
- Cipla Ltd.
- State Bank of India
- Mahindra & Mahindra Ltd.
- Power Grid Corporation of India Ltd.
- Nestle India Ltd.
- Dr Reddys Laboratories Ltd.
- Bajaj Auto Limited
- Britannia Industries Ltd.
- HCL Technologies Ltd.
- Tech Mahindra Ltd.
- NTPC Limited
- Wipro Ltd.
- Hero MotoCorp Ltd.
- Sun Pharmaceutical Industries Ltd.
- UltraTech Cement Limited
- Bharat Petroleum Corporation Ltd.
- Indusind Bank Ltd.
- Adani Ports & Special Economic Zone
- Oil & Natural Gas Corporation Ltd.
- Coal India Ltd.
- Economic Zone
- Grasim Industries Ltd.
- Eicher Motors Ltd.
- Tata Steel Ltd.
- JSW Steel Ltd.
- Indian Oil Corporation Ltd.
- Zee Entertainment Enterprises Ltd.
- UPL Ltd.
- Vedanta Ltd.
- Bharti Infratel Ltd.
- GAIL (India) Ltd.
- Tata Motors Ltd.
- Hindalco Industries Ltd.
Nifty50 is an index that is diversified across 13 different sectors of the country’s economy, including sectors like finance, consumer goods, oil, automobile, construction, media and so on.
Salman is a prolific environmental writer, and has authored more than 500 articles in reputed journals, magazines and websites. He is proactively engaged in creating mass awareness on renewable energy, waste management, sustainability and conservation all over the world.
Salman can be reached on salman@cleantechloops.com
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