Nifty 50 is one of the most popular indices on the Indian stock markets and sees a huge volume of transactions on a daily basis. This index consists of the top 50 large-cap stocks but when you want to trade in the next 50 stocks, you can consider Nifty Next 50. Have you heard about this index? Check out this blog to learn all about the Nifty Next 50 index and how to trade in it.
What does Nifty Next 50 mean?
The Nifty Next 50 index is a secondary index to the Nifty 50. It comprises the next top 50 companies based on the market index that are not part of the Nifty 50 index. These companies are ranked 51st to 100th in terms of market capitalization. This index was launched in 1996 to gauge the performance of emerging companies in India that have the potential to be future market leaders.
The companies included in this index belong to various sectors like banking, pharmaceuticals, IT, metals, consumer goods, etc. This index is rebalanced twice a year in March and September based on the latest market capitalization. Investing in the Nifty Next 50 index is considered to be riskier as compared to the Nifty 50 index due to its higher volatility and therefore, is preferred by investors with a long-term horizon and a higher risk appetite as compared to participants of the Nifty 50 index.
Read More: What is FINNIFTY Index? – All you need to Know
How are stocks in Nifty Next 50 selected?
The criteria for selecting constituent stocks for the Nifty Next 50 index are as follows:
- The index includes 50 companies that are chosen from the Nifty 100 list, with Nifty 50 constituents excluded.
- The combined weight of index constituents that are not available for trading in the Futures and Options (F&O) segment (referred to as Non F&O stocks) is limited to 15% during quarterly rebalancing.
- The weight of individual non F&O stocks in the index is capped at 4.5% during quarterly rebalancing.
- The Nifty Next 50 index’s base date is November 4, 1996, and it is assigned a base value of 1000.
The sectors represented in the Nifty Next 50 index and their weightage as of July 31st 2023 are tabled below.
| Sector | Weightage (%) |
| Financial Services | 19.35 |
| FMCG | 14.67 |
| Capital Goods | 11.45 |
| Consumer Services | 8.17 |
| Chemicals | 8.02 |
| Construction Materials | 6.58 |
| Oil, Gas, & Consumable Fuels | 5.94 |
| Power | 4.89 |
| Metals and Mining | 4.58 |
| Consumer Durables | 3.94 |
| Automobiles and Auto Components | 3.15 |
| Realty | 2.56 |
| Services | 2.55 |
| Textiles | 1.82 |
| Healthcare | 1.46 |
| Telecommunication | 0.89 |
Given above was the broad sector-wise allocation of stocks on the Nifty Next 50 Index. The list of stocks on the Nifty Next 50 index as of 31st August 2023 is tabled hereunder.
| Companies on the Nifty Next 50 Index | ||||
| ABB India Limited | Berger Paints India Limited | Godrej Consumer Products Limited | Indus Towers Limited | SBI Cards And Payment Services limited |
| ACC Limited | Bharat Electronics Limited | Havells India Limited | Jindal Steel & Power Limited | Shree Cements Limited |
| Adani Energy Limited | Bosch Limited | HDFC Asset Management Company Limited | LIC | Seimens Limited |
| Adani Green Energy Limited | Canara Bank | Hindustan Aeronautics Limited | Marico Limited | SRF Limited |
| Adani Total Gas Limited | Cholamandalam Investment and Finance Company Limited | ICICI Lombard General Insurance Company Limited | Muthoot Finance Limited | Tata Power Company Limited |
| Adani Wilmar Limited | Colgate-Palmolive (India) Limited | ICICI Prudential Life Insurance Company Limited | Page Industries Limited | Torrent Pharma |
| Ambuja Cements Limited | Dabur India Limited | Indian Oil Corporation Limited | PI Industries Limited | United Spirits Limited |
| Avenue Supermarts | DLF Limited | IRCTC | Pidilite Industries Limited | Varun Beverages Limited |
| Bajaj Holdings and Investments Limited | FSN E-Commerce Ventures Limited | Info Edge (India) Limited | P&G | Vedanta Limited |
| Bank of Baroda | Gail (India) Limited | Interglobe Aviation Limited | Samvardhana Motherson International Limited | Zomato Limited |
Is Nifty Next 50 better than Nifty 50?
Whether the Nifty Next 50 is better than the Nifty 50 depends on various factors, including investment goals, risk tolerance, and market conditions. The Nifty Next 50 index includes companies with growth potential beyond the top 50, aiming to capture emerging leaders. However, it generally involves higher risks and volatility due to the nature of these companies. The Nifty 50, on the other hand, consists of established blue-chip companies and is often considered more stable.
Investors seeking potentially higher returns and willing to tolerate greater risk might find the Nifty Next 50 appealing. However, those who prioritize stability and are more risk-averse may prefer the Nifty 50. Both indices offer unique opportunities, so the choice depends on individual investment preferences.
The historical returns of Nifty 50 and Nifty Next 50 are tabled below for a brief comparison.
| Index | YTD | 6 months | 1 year | 3 year | 5 year | 10 year |
| Nifty 50 | 6.69% | 11.63% | 10.01% | 65.85% | 64.45% | 265.51% |
| Nifty Next 50 | 4.94% | 18.84% | 2.88% | 58% | 43.88% | 333.88% |
How to invest or trade in Nifty Next 50?
The primary requirement for investing or trading in Nifty Next 50 stocks or the index as a whole is to have a Demat account and a trading account with a registered broker. As is the case with Nifty 50, investors can traders can either focus on individual stocks on the Nifty Next 50 index or the index as a whole.
Therefore, one of the simple ways for investing in the Nifty Next 50 index, is by investing in index funds or ETFs that are based on the Nifty Next 50 index and thereby track its performance. Investing in these options is through the registered broker or directly through the AMC offering these funds. Similarly, traders can also focus on F&O stocks on the Nifty Next 50 stocks and trade in futures and options contracts or forward contracts.
Some of the popular Index funds and ETFs having Nifty Next 50 as a benchmark include,
- UTI Nifty Next 50 Index Fund Direct Growth
- Motilal Oswal Nifty Next 50 Index Fund Direct Growth
- DSP Nifty Next 50 Index Fund Direct Growth
- Nippon India ETF Junior BeES
- ICICI Prudential Nifty Next 50 ETF
- Mirae Asset Nifty Next 50 ETF
Conclusion
Nifty Next 50 is a dynamic index that captures the performance of large-cap stocks ranking from 51st to 100th on the stock exchange as per market capitalization. This index has traditionally provided better returns as compared to Nifty 50 and Sensex but has seen a relatively lower performance over the past 5 years. However, the index comprises stocks that are set to be the emerging market leaders in their respective sectors and therefore can be a good investment opportunity for long-term investors.
