NIFTY Next 50 Index

Explore NIFTY Next 50 Index, offering insights into emerging market trends and investment opportunities.
NIFTY Next 50 Index
3 mins read
26 March 2024

Investing in the NIFTY Next 50 index

The NIFTY Next 50 index represents the future potential of the Indian stock market, encompassing 50 large-cap companies that follow the NIFTY 50 in terms of market capitalisation. These companies are often referred to as the 'junior NIFTY' and are considered to be on the cusp of becoming market leaders. For investors looking to diversify their portfolio beyond the top 50 companies, the NIFTY Next 50 offers a compelling investment opportunity.

ETFs vs index funds

Exchange-Traded Funds (ETFs) and Index Funds are gaining popularity among Indian investors seeking passive investment options that track market indices. Here is a comparison:

1. ETFs with high liquidity:

ETFs in the Indian stock market are known for their high liquidity, offering investors the flexibility to buy and sell shares throughout the trading day at prevailing market prices. This liquidity is attributed to the ETFs being traded on stock exchanges, similar to individual stocks, making them suitable for short-term trading strategies or tactical asset allocation.

2. Investment approaches:

  • Weighted Index ETFs: Some ETFs in India replicate market indices with exact weightage, commonly known as weighted index ETFs. These ETFs allocate a higher proportion of their assets to stocks with larger market capitalisation, reflecting the market dynamics accurately. Investors can choose these ETFs to mirror the performance of specific market indices closely.
  • Equal Weightage Index ETFs: Alternatively, there are ETFs that follow an equal weightage index strategy. These ETFs invest an equal amount in each stock irrespective of their market capitalisation. Equal weightage index ETFs offer diversification across all stocks within the index, regardless of their size, potentially capturing opportunities among smaller companies.

Understanding how to invest in NIFTY Next 50 index

The NIFTY Next 50 index is a diversified large-cap index that includes companies ranked from 51st to 100th based on free-float market capitalisation. This index is dynamic, with companies moving in and out based on their performance. It is a snapshot of the next tier of companies that are poised for growth and could potentially ascend to the NIFTY 50 in the future.

Investment options

Investors have multiple avenues to invest in the NIFTY Next 50 index:

  1. Index funds: These mutual funds replicate the index by investing in the same stocks in the same proportions. They offer a passive investment strategy, aiming to mirror the performance of the NIFTY Next 50.
  2. Exchange-Traded Funds (ETFs): ETFs are similar to index funds but are traded on stock exchanges like individual stocks. They provide the flexibility of intra-day trading and typically have lower expense ratios compared to mutual funds.
  3. Direct stock purchase: Investors can also choose to buy shares of all the companies listed in the NIFTY Next 50 Index in the same weightage as the index. This requires significant capital and active management.

Why invest in the NIFTY Next 50?

The NIFTY Next 50 index offers several advantages:

  • Diversification: It provides exposure to a broader range of companies beyond the top 50.
  • Growth potential: These companies have the potential to grow and become part of the NIFTY 50, which could lead to significant returns.
  • Passive management: Index funds and ETFs offer a hands-off approach to investing, which is beneficial for investors who prefer a long-term, buy-and-hold strategy.

How to invest in NIFTY 50 Index via Bajaj Finserv Platform

  1. Invest smartly in mutual funds with high returns and no commission through Bajaj Finserv.
  2. Access the platform via the website or the app available on Google Play Store and App Store.
  3. Under 'Investments' on the homepage, click 'All Investments' then select the 'Mutual Funds' icon.
  4. Explore funds by filtering according to scheme type, risk, returns, or choose from top-performing funds.
  5. View mutual fund details including minimum investment, annual return, and rating.
  6. Initiate investment by clicking 'Invest Now', entering your mobile number, and signing in with the OTP received.
  7. Complete KYC by verifying details and, if needed, uploading address proof and a video.
  8. Provide bank and additional personal details, upload a signature for verification.
  9. Select your mutual fund, investment type (SIP or lumpsum), and amount, then click 'Invest Now'.
  10. Choose a payment method (net banking, UPI, NEFT/RTGS).
  11. Post-payment, the investment completes and reflects in your portfolio within 2-3 working days.

Conclusion

The NIFTY Next 50 index is an excellent choice for investors looking to tap into the growth potential of India's large-cap segment. With various investment options available, it caters to different investment styles and preferences. As always, investors should conduct their own research or consult with a financial advisor to align their investments with their financial goals and risk appetite. Bajaj Finserv, a leading financial services company in India, offers various investment options for those interested in the NIFTY Next 50 index. Through Bajaj Finserv, investors can access funds that aim to replicate the performance of the NIFTY Next 50, providing an opportunity to invest in the potential market leaders of tomorrow and know how to buy the NIFTY Next 50 index fund.

Frequently asked questions

What is the NIFTY Next 50 Index?

The NIFTY Next 50 Index includes companies ranked from 51st to 100th based on free-float market capitalisation after excluding the NIFTY 50 companies. It represents about 10% of the free float market capitalisation of the stocks listed on the National Stock Exchange (NSE) as of January 2024.

How can I invest in the NIFTY Next 50 Index?

You can invest through Index Funds or Exchange-Traded Funds (ETFs) that track the NIFTY Next 50 Index or by purchasing shares of all the companies listed in the index directly.

What are the benefits of investing in the NIFTY Next 50 Index?

The index offers diversification beyond the top 50 companies and includes companies with potential growth that could become part of the NIFTY 50, providing a balance of stability and growth prospects.

Are there any risks involved in investing in the NIFTY Next 50 Index?

Like any investment in equities, investing in the NIFTY Next 50 Index carries market risks, including volatility and the possibility of not recovering the initial investment if the market declines.

How has the NIFTY Next 50 Index performed historically?

The performance of the NIFTY Next 50 Index varies over time. It is important to look at the historical data and trends to understand its past performance, but past performance is not indicative of future results.

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