Top Nifty 50 Companies in India 2024: Benefits of Investing in Them

Top Nifty 50 Companies: Introduction

Nifty 50 is a benchmark index in India. It indicates the weighted average of the top 50 companies listed in NSE. The term Nifty 50 is made by combining two terms: Nifty, which is NSE, and 50, which is a number of most significant companies in India. Simply put, the Nifty 50 is a collection of 50 best-performing stocks on the National Stock Exchange. Basically, it acts like a barometer for the entire stock market movement. Further, this index is prevalent among the mutual fund companies that use it as a benchmark for tracking the performance of various actively managed mutual funds. In this article, we will provide the latest Nifty 50 companies list. Read on! 

What is NIFTY 50? 

Nifty 50 index was introduced in April 1996, by the National Stock Exchange of India. At present, it is managed and owned by IISL, which is Index and Services and Products Limited. For those who don't know, IISL is a subsidiary of NSE Strategic Investment Corporation Limited. 

Nifty 50 acts like a basket that holds the top 50 stocks in the market. Further, you'll be amazed to know that the total market cap of these Nifty 50 companies is around Rs. 131,128,441 million, making it one of the most traded indexes in the entire world. 

How to Calculate Nifty 50? 

Initially, Nifty 50 was calculated on the basis of complete market capitalization. However, from June 2009, it is computed on a free-float market cap basis. This means the stocks from the promoter of the Nifty 50 companies are not included in the calculation. The reason behind this is, that the stocks of promoters are not available for trading freely. Below is a formula for calculating Nifty 50:

Nifty 50 = Current Market Value ÷ (Base Market Capital * 1000)

When you calculate Nifty 50, keep in mind the following things:

• Base value of Nifty 50 Index = 1000 points. 
• Base Capital of Nifty 50 = Rs. 2.06 Trillion 
• Base Date for Computed Nifty 50 Index = November 3rd,1995.

Top Nifty 50 Companies: Selection Criteria

Wondering how stocks or companies are selected for the Nifty 50 company list? Here is your answer:

A set of guidelines and criteria needs to be followed to decide which stocks or companies will be listed in the Nifty 50 Index. The selection criteria for Nifty 50 companies' name is as follows:

1. Must Be Listed on NSE

The very first criteria that a company needs to meet in order to get included in the nifty companies list is that it should be listed on NSE. Moreover, it should be listed for a minimum of 6 months on the market. Besides, the stocks of that company should be readily available for trading in the F&O segment of NSE. 

        2. Liquidity

Liquidity is another important factor that is considered at the time of including a company or stock in the Nifty 50. This simply means the stock should have a large trading volume so that it can be easily sold and bought when needed. 

        3. Free-Float Market Cap

The top 50 companies in the National Stock Exchange are selected on the basis of free-float market capitalization. Know that the free-float market cap of a company is calculated by multiplying its stock price by the total number of shares available in the market. For instance, if a corporation has 10,000 available shares and the price of each is Rs. 100, then the market cap of this corporation will be (10,000 * 100) 10,00,000.

       4. Rebalancing

Here is the most interesting thing, the top 50 stocks that are there in the Nifty company list are not permanent. The Nifty 50 index is rebalanced or, say, revised twice per year, once in June and once in December. In this revision, all the stocks that have lost their value and are performing poorly are replaced by the high-performing and valuable companies. In simple words, the stocks that no longer match certain criteria, are removed from the list. 

Top Nifty 50 Companies: How to Invest in Them?

Following are the best ways to invest in top Nifty 50 companies:

1. Invest in Individual Stocks 

You can purchase stocks with the allocation same as the Nifty 50 index. However, the issue with this way of investing in Nifty 50 is the capital requirement. To purchase 1 share from each of Nifty 50, you will have to invest around Rs. 1.57 lakhs. And not all retail investors have this much funds available for investing. Moreover, managing the top 50 stocks can get really overwhelming. 

        2. Trade in Nifty F&O (Futures and Options) 

Investors who have limited capital can invest freely in Nifty Futures and Options. Again, not all types of investors are comfortable with this method. Because these contracts need to be settled on month's last Thursday, investors might end up booking losses which are quite high because of the high leverage in the F&O department. 

List of Top 10 Nifty 50 Companies in India 

Below is a list of the top ten Nifty 50 companies in the country you can consider investing in:

As of 24 Feb 2023, Source: Google Finance

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns

Top Nifty 50 Companies: Benefits of Investing in Them

Why should I invest in Nifty 50 companies? This is one of the most anticipated questions among investors. Below are some of the benefits of investing in the top Nifty 50 stocks list 2024:

1. Minimum Investment

Because index funds collect money from numerous investors, the minimum amount required to invest is the lowest. You can start investing in Nifty 50 companies with a capital as low as 500, by starting a SIP and partially owning all the top stocks with the same allocation as the index. Moreover, you also have the flexibility to change or upgrade your investment any time you want. These features make investing in index funds easy and hassle-free. 

        2. Lower Expense Ratio 

The role of a fund manager is just to copy the benchmark and rebalance the holdings according to the weights. Also, there is no active trading involved in dealing with index funds. This results in low fund management costs as compared to the active funds. And this is the reason why the expense ratio of index funds is very low. 

       3. Better Portfolio Management 

Your investments are managed by qualified and experienced fund managers who are responsible for decreasing or increasing your holdings. This means you don't need to worry about rebalancing or updating your holdings and keep in check with the Nifty 50 index. 

       4. No Bias

Investing in index funds is a simple and straightforward process. The portfolio is simply replicated by the Nifty 50 benchmark. Moreover, your fund manager will be given a particular mandate about the type and quantity of the equities that need to be purchased. In this way, the investment strategy removes any human bias and results in a more practical investment. 

Final Words 

Nifty 50 companies are the best-performing companies in the country. These 50 companies keep on replacing on the basis of their performance. Moreover, these are the most sought-after companies for investors as they offer low-risk and great returns over the long term.

Important things to remember:

1. Do Not Blindly Follow Hot Tips

No matter how credible the source is, never follow a stock marketing tip blindly without conducting thorough research personally. Always select the stocks after doing proper research and analysis on the performance as well as the companies. While some tips can work out to give you huge benefits, the wrong ones can push you down under the risk pretty quickly. 

2. Eliminate Loser Stocks from Portfolio 

There is absolutely no guarantee that a stock will rise after a great fall. Know that it is extremely important to be practical about what is possible and what's impossible in the stock market. So, upon realizing that a stock is performing poorly in your portfolio, accept your mistake and sell it immediately to prevent further losses. 

3. Don't Exceed Your Investment Budget Abruptly 

While it's true that long-term investments are way better than other forms of investment, you shouldn't exceed your investment budget in a haste. Instead, decide on a fixed amount and invest it across various good stocks. Rather than investing in only one stock, divide your budget evenly across multiple good-performing stocks and shares. 

Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns