NIFTY 50: The NIFTY Following 50 list the following 50 firms after removing the NIFTY 50 from the Nifty 100. Briefly, the free-float market capitalization technique is used to construct NIFTY Next 50 and all other indexes.
This strategy assigns a greater weight to the stock based on free-float market capital rather than total market capital. The free-float market cap is the market value that remains after the promoter share in the firm is removed.
SEBI has categorized equities into three different sizes: big, mid, and trim. Large-cap stocks are those with a market capitalization over a certain threshold.
The Nifty 50 and the Nifty Next 50 mutual funds comprise this list of 100 large-cap funds. This implies that the Nifty 50 includes the first 50 stocks, whereas the Nifty Following 50 consists of the next 50 equities, numbered 51 to 100. Two indices make up the Nifty 100 Index: the Nifty 50 and Nifty Next 50.
Nifty Next 50 Index Fund Advantages
This index may be used for a number of reasons, including comparing mutual funds and investment portfolios, measuring underperformance/overperformance and providing the basis for index funds (ETFs) and structured products (such as mutual funds). Investing in large-cap companies might be risky, but not if you use these funds. The following are some additional advantages of investing in the Nifty 50 Index Fund:
To put it another way, no one stock dominates the Nifty Next 50. Consequently, Nifty Next 50 has a substantial edge over Nifty 50.
The Nifty Next 50 Index Fund is worth investigating for the following four reasons:
It is critical that you get familiar with the four main reasons for investing in the Nifty Next 50 Index fund now that we know what it has to offer.
Large and mid-cap companies outperform.
A remarkable track record of performance has been maintained by the Nifty Next 50. Additionally, the Nifty 50 index and mid-cap indexes are both beaten by it. When compared to the NIFTY 50 index’s annualized return (PR) of 12.0%, the NIFTY Next 50 index has generated an excess return of 4.3% per year from its launch in November 1996 to the 31st December 2018 date.
A wide range of business interests.
The Nifty 50’s top ten holdings account for 58.3% of the index, while the Nifty Next 50’s top ten holdings account for just 33%. Because the Nifty is more strongly concentrated in leader firms in their respective sectors, some of the top holdings of the Nifty 50 may reach 10%.
Neither of the top 50 holdings in the Nifty Next 50 surpasses 5%. As a consequence, the Nifty Next 50 outperforms the Nifty 50 index when the whole market is involved. The Nifty 50 index does well in highly volatile markets like today.
The top holdings in the Nifty Next 50 index are growth-oriented businesses in typically defensive sectors.. [Indices]. Consumer goods (16.75 percent), consumer services (9.91 percent), and pharmaceuticals (8.36 percent) will be more heavily weighted in the Nifty 50 index in December 2021 than they are now.
Nifty 50 spawning grounds
The Nifty Next 50 serves as a stepping stone to the Nifty 50. The Nifty Next 50 is used to choose new firms for the Nifty 50 basket. 41 stocks have been elevated to NIFTY 50 during the previous 18 years, with 27 of those stocks now comprising NIFTY 50. Hence, the term “tomorrow’s blue-chip corporations” to describe the Nifty Next 50.
On 5paisa, one can easily trade nifty 50 companies.