The S&P CNX Nifty ( Nifty 50 or simply Nifty) is a composite of the top 50 stocks listed on the National Stock Exchange (NSE), representing 24 different sectors of the economy. It is a simplified tool that helps investors and ordinary people alike, to understand what is happening in the stock market and by extension, the economy. If the Nifty Index performs well, it is a signal that companies in India are performing well and consequently that the country is doing well.
An upbeat economy is usually reflected in a strong performance of the Nifty Index. A rising index is also indicative that the investors are gung-ho about the future. The Nifty Index is based upon solid economic research. It is internationally respected and recognized as a pioneering effort in providing simpler understanding of stock market complexities.
Nifty is the flagship index of NSE, the 3rd largest stock exchange in the world in terms of number of transactions (Stock Futures).
Ownership and Management
Nifty was developed by the economists Ajay Shah and Susan Thomas, then at IGIDR. Later on, it came to be owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India’s first specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard & Poor’s ( who are world leaders in index services.
CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, ‘C’ stands for CRISIL, ‘N’ stands for NSE and X stands for Exchange or Index. The S&P prefix belongs to the US-based Standard & Poor’s Financial Information Services.
It is calculated as a weighted average, so changes in the share price of larger companies have more effect. The base is defined as 1000 at the price level of November 3, 1995
Criteria for inclusion of Stock in Nifty50
- Average market capitalization of Rs.5,000 million or more during the last six months.
- Liquidity: Cost of transaction (impact cost) of less than 0.75% for more than 90% of trades, over six months.
- At least 12% floating stock (not held by promoters of the company or their associates)