NIFTY 50 components and weightage

This entry is part 2 of 4 in the series Stock Indices

10/27/2018

What is NIFTY ?

Nifty is the reference index which is referred to by the investors on a daily basis. The direction of Nifty represents the trend of the market and most stocks tend to move in its direction. But, sometimes people confuse Nifty with the entire market. For example: In 2018, a lot of people had doubts regarding their portfolio being down despite of Nifty hitting all time high. Hence it is important to understand Nifty and its index value better. In short, Nifty is a benchmark index which comprises of 50 companies from 13 different sectors. These 50 companies are among the largest companies in India and are a proxy for the performance of Indian economy.

NIFTY full form is National stock exchange fifty. It is among the two most common benchmark index in India, namely – Sensex and Nifty. The movements in Nifty happen as a result of the movement in these 50 stocks. Its market capitalization is around 2.27 trillion USD which keeps changing as per the movement in the market. Nifty was first launched in 1996 with a base value of 1000. Since, then it has given a 11% return CAGR. At times, new companies whose market capitalization grow higher are added in NIFTY replacing existing NIFTY companies whose market capitalization might have gone down.

Nifty Stocks

Components and Weightage

NIFTY 50 stocks belong 13 different sectors. The below pie chart shows the weightage of different sectors in Nifty. Financial services (banks, insurance and NBFCs) form a large chunk (35%) of NIFTY. It is followed by IT (15%), Energy (16%) and consumer goods (11%). These four sectors contribute to 77% of NIFTY’s value and remaining 23% being comprised by Automobile, Construction, Pharma, Cement, Telecom, Services, Media and Fertilizers. Given the large contribution of Banking stocks in NIFTY, there is a high correlation between the movement of banking stocks and NIFTY.

NIFTY Sectors

Coming to the stocks from these sectors, some heavyweight stocks like Reliance, HDFC Bank, ITC, TCS, Infosys, etc have higher weightage in Nifty index. Below table lists the 50 NIFTY stocks with their weightages in Nifty. The top 10 stocks alone contribute to almost 58% to the index. A positive movement in few of these big stocks can take NIFTY up and vice versa. This is exactly what happened in the first half of 2018 where Reliance, HDFC Bank, TCS, Kotak Mahindra and HUL drove NIFTY to all time high of 11,700 when all the other NIFTY and non NIFTY stocks were falling. As discussed, earlier, the list is dynamic and keeps changing basis the movement of stocks. Some existing stocks can be replaced by new stocks or the weightage of certain stocks might change with time.

Tata Consultancy Services 9.19%
Reliance Industries 9.01%
HDFC Bank Ltd 7.25%
ITC Ltd 4.67%
Hindustan Unilever Limited 4.59%
HDFC 3.97%
Infosys Ltd 3.76%
State Bank of India 3.01%
Kotak Mahindra Bank 3.01%
ICICI Bank Ltd 2.76%
Maruti Suzuki India 2.76%
Oil & Natural Gas Co 2.65%
Coal India Ltd 2.37%
Larsen & Toubro Ltd 2.29%
Wipro Ltd 1.96%
Axis Bank Ltd 1.88%
Bajaj Finance Ltd 1.84%
HCL Technologies Ltd 1.83%
Indian Oil Corporation 1.81%
Sun Pharmaceuticals 1.81%
NTPC Ltd 1.79%
Bharti Airtel Ltd 1.62%
Asian Paints Ltd 1.55%
Power Grid Corporation 1.34%
UltraTech Cement Ltd 1.26%
Mahindra & Mahindra 1.23%
IndusInd Bank Ltd 1.18%
Bajaj Finserv Ltd 1.16%
JSW Steel Ltd 1.11%
GAIL (India) Ltd 1.05%
Vedanta Ltd 1.03%
Bajaj Auto Ltd 0.99%
Titan Company Ltd 0.97%
Tech Mahindra Ltd 0.87%
Adani Ports 0.86%
Tata Steel Ltd 0.84%
Bharat Petroleum Corporation Ltd 0.81%
Eicher Motors Ltd 0.81%
Hero MotoCorp Ltd 0.74%
Tata Motors Ltd 0.73%
Grasim Industries Ltd 0.68%
Hindalco Industries 0.68%
Bharti Infratel Ltd 0.67%
Cipla Ltd 0.66%
Yes Bank Ltd 0.57%
Zee Entertainment 0.55%
Dr Reddys Laboratories 0.54%
Hindustan Petroleum Corp Ltd 0.47%
UPL Ltd 0.43%
Indiabulls Housing Finance Ltd 0.4%

The above data is as per 28th October, 2018. Hope, this article would have given you a clear understanding about what Nifty comprises of.

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Disclaimer: I am not a SEBI registered analyst and not advising anyone to buy. The purpose of this article is to share my viewpoint about fundamentals and the future prospects of the company. So, please do not consider this as an investment tip. Talk to your financial advisor before taking any investing call.

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