What is Nifty Next 50? How to trade in it?

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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.

Table of Contents hide

1 What does Nifty Next 50 mean?

2 How are stocks in Nifty Next 50 selected?

3 Is Nifty Next 50 better than Nifty 50?

4 How to invest or trade in Nifty Next 50?

5 Conclusion

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.

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

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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.