You heard about NIFTY 50 companies a lot and it has a number as well, i.e 50 making it NIFTY 50. Why exactly?
This is because Nifty is an index that is solely made on these 50 top companies in the Stock Market. Now you might be having lots of questions and that’s okay since we will learn about these companies along with their weightage in the NIFTY 50 Index.
Who Decides Top 50 Companies in NIFTY 50 Companies?
Well, the answer is pretty simple. No one decides the top 50 companies in this index however it is placed on the basis of Market Capitalization also known as the Market Cap of the company.
Now Market Cap is something that many isn’t aware of but it shows us the market value of a particular public traded company’s outstanding shares.
It is calculated on the simple formula, that is, Share Price multiplied by the Oustanding Shares in the market.
Let’s take an example of XYZ Limited.
- The share price of XYZ Limited is Rs 200
- The outstanding shares of XYZ Limited are 10,000
- Therefore the Market Cap of XYZ Limited is 200 x 10,000 which equals 20,00,000 (20 Lakhs)
The List of NIFTY Companies and their weightage
- HDFC Bank Ltd. – 10.24%
- Reliance Industries Ltd. – 10.19%
- Infosys Ltd. – 7.98%
- Housing Development Finance Corporation Ltd. – 7.08%
- ICICI Bank Ltd. – 6.34%
- Tata Consultancy Services Ltd. – 5.18%
- Kotak Mahindra Bank Ltd. – 4.05%
- Hindustan Unilever Ltd. – 3.42%
- ITC Ltd. – 3.01%
- AXIS Bank Ltd. – 2.76%
- Larsen & Toubro Ltd. – 2.70%
- State Bank of India – 2.20%
- Bajaj Finance Ltd. – 2.15%
- Bharti Airtel Ltd. – 1.97%
- Asian Paints Ltd. – 1.80%
- HCL Technologies Ltd. – 1.68%
- Maruti Suzuki India Ltd. – 1.44%
- UltraTech Cement Ltd. – 1.22%
- Mahindra & Mahindra Ltd. – 1.20%
- Sun Pharmaceutical Industries Ltd. – 1.02%
- Titan Company Ltd. – 1.02%
- Tech Mahindra Ltd. – 0.97%
- Wipro Ltd. – 0.96%
- Nestle India Ltd. – 0.96%
- Tata Steel Ltd. – 0.96%
- Bajaj Finserv Ltd. – 0.92%
- HDFC Life Insurance Co. Ltd.- 0.91%
- Power Grid Corporation of India Ltd. – 0.87%
- Grasim Industries Ltd. – 0.87%
- Dr. Reddy’s Laboratories Ltd. – 0.86%
- IndusInd Bank Ltd. – 0.85%
- Tata Motors Ltd. – 0.85%
- Adani Port and Special Economic Zone – 0.81%
- NTPC Ltd. – 0.80%
- Bajaj Auto Ltd. – 0.75%
- Hindalco Industries Ltd. – 0.75%
- Divi’s Laboratories Ltd. – 0.73%
- JSW Steel Ltd. – 0.71%
- Britannia Industries Ltd. – 0.67%
- Cipla Ltd. – 0.65%
- Bharat Petroleum Corp. Ltd. – 0.63%
- Shree Cement Ltd. – 0.62%
- Hero MotoCorp Ltd. – 0.60%
- TataConsumer products Ltd. – 0.42%
- Oil & Natural Gas Corporation Ltd. – 0.59%
- Eicher Motors Ltd. – 0.57%
- UPL Ltd. – 0.56%
- SBI Life Insurance Co. – 0.54%
- Coal India Ltd. – 0.43%
- Indian Oil Corporation Ltd. – 0.37%
These all above companies are the NIFTY 50 companies and they have the highest market capatilization compared to rest of the companies in the stock market.
These companies usually are well doing companies but we never know which will be able to make it in the future.
For example, recently in the early 2021, GAIL India was replaced by Tata Consumer.
Overall, I wanted to make a point about that the market capatalization changes on many factors and company might keep changing in the future but we will update it right away here.
What Does NIFTY 50 Index Do And Why It Is Made?
NIFTY 50 Index is made out of the top 50 companies as we know, and this companies usually moves the market up and down. Therefore it is often represented as a indicator for the stock market sentiments whether it is doing well or not.
If this index value is increasing then the market is considered to be doing well and is Bullish while the opposite means it is not doing well and is bearish.
This also becomes an indicator for the economy and the economy is judged by this index most of the time.
Wrapping It Up
I hope you got an idea of why Index are made. Soon, I will be writing another article on the SENSEX which is also an Index made up of Top 30 companies. I will soon explain you why Nifty 50 price is less than SENSEX even though SENSEX is only made up of 30 companies.
Stay tuned, share it with your friend to let them know what exactly are the NIFTY comapanies.