Complete review of the NIFTY 50 index: history and features

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The NIFTY 50 is the flagship index of the National Stock Exchange of India (NSE). In this article, we will discuss its history, the latest market news, how it is calculated, and where to find live charts with today’s prices.

What is the history of the NIFTY?

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NIFTY 50 has the status of one of the two most known indexes in India (the second one is BSE SENSEX). NSE Indices Limited, India’s first specialized company that focuses on an index with an interactive chart as on the product core, owns and manages NIFTY 50.

The index has been trading on the National Stock Exchange of India since April 22, 1996, and covers the most significant sectors. The NIFTY comprises 50 of approximately 1600 companies traded on NSE that capture about 65% of its float-adjusted capitalization and accurately reflect the Indian stock market. The NIFTY is well-suited for benchmarking index funds or index-based derivatives, trading stock options on an intraday basis, etc.

Since its launch, the index has returned 11% CAGR (compound annual growth rate). That means that ₹1,000 invested in 1996 is now up to ₹17,000 today.

Note! The website has a Market Data function that allows you to watch the equity market live. In addition to the NIFTY 50 index, you can also see the movement of the NIFTY Bank, NIFTY 100, NIFTY IT, and other indices on the website.

What sectors are covered by NIFTY?

NIFTY 50 represents vital sectors in the Indian economy. According to NSE on April 29, 2022, Financial services account for 34.82% of the weight. Also, IT (16.15%) and Consumer goods (7.75%) are next, followed by Energy (14.62%). Automobiles go 5.17%, 3.25% of the NIFTY is in the Metals, Pharmaceuticals is 4.06%, Construction is 2.74%, Telecom and Construction Materials are 2.33%, Services are 0.82%, Fertilisers & pesticides are 0.60%.

What stocks are part of NIFTY 50?

According to NSE, on April 29, 2022, the top 5 NIFTY stocks were led by Reliance Industries Ltd, streaming with 12.86%, and HDFC Bank Ltd. with 8.10%. Also, Infosys Ltd. positions in third place with 7.66%, followed by ICICI Bank Ltd. with 6.90%. Housing Development Finance Corporation is going to 5.39%.

How is the NIFTY index calculated?

NIFTY is calculated using the weighted values of 50 stocks on the NSE. The index is an average of the share prices of all its constituent companies. It is also based upon free-float market capitalization.

The index value reflects the stock’s value relative to the base period:

Index value = Current Market Value / (Base index value * Base market capital)

Note! You can quickly find current quotes, including those in Hindi, by doing a Google search. Up-to-date data is presented, for example, on the NSE terminal live.

NIFTY 50 News & Analysis: recent updates

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For the few sessions in May, NIFTY traded sideways. NIFTY formed a Doji pattern on the daily chart on May 16, 2022. According to Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas, it is a sign of indecision among market participants.

NIFTY formed a triangular price pattern on its hourly chart, emerged from the indecisive phase, and moved to the upside on May 17. Why is the NIFTY rising? The market was supported, among other things, by aggressive growth in shares of steel and energy companies led by Coal India, Tata Steel, JSW Steel, and Hindalco.

Metals in the index added more than 6%, followed by the oil and gas index, which grew more than 3.5%. NIFTY climbed above 16250 and crossed the hourly moving averages. These observations show that today, the NIFTY index is in a positive short-term trend.

According to Gaurav Ratnaparkhi, in the short term, 16480-16500 will be the initial target area. On the other hand, 16100-16000 can now perform as a near-term support zone.

Details on today’s NIFTY share price

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At Thursday’s May 19 close, India’s equity shares were lower because of losses in the IT, Technology, and Metals sectors.

The NIFTY 50 index lost 2.65% at the close of NSE on May 19. The July Brent oil contract was 1.04% down today, or 1.14, to trade at $107.97 per barrel. Wipro Ltd lost the most, namely 6.25% or 30.1 points, to trade at 451.35. HCL Technologies Ltd fell 5.99% or 64.30 points. Infosys Ltd lost 5.46%. The US Dollar Index Futures fell 0.45% at 103.39. Crude oil fell 1.44%, or 1.54 points, to reach $105.50 per barrel.

However, not all stocks fell. ITC Ltd, also called NIFTY IT, was the biggest gainer of the session on NIFTY 50. It happened to rise 3.32%, or 8.85 points, to trade at 275.65. Dr. Reddy’s Laboratories Ltd. added 0.61% or 23.65 points. Power Grid Corporation of India Ltd. was up 0.37 or 0.85 points. Gold Futures for June delivery were up 0.62%, or 11.32 points, to $1,827.22 per troy ounce in commodities trading.

Final words about NIFTY

NIFTY is an index that shows the situation in the Indian market, as it includes the 50 largest companies in the country from all sectors of the economy. Futures contracts on the share market today are based on this index. Investing in the NIFTY 50 equity presents a great gateway into the stock market. However, it is essential to remember that it contains stocks, and they are volatile, which means that the risks of losing funds are not excluded.

Alex has over 9 years of experience in the financial markets. He has worked with various financial firms globally and has expertise in technical and fundamental analysis. Alex has fulfilled various roles in his 9 years of experience and has worked as an investment advisor, financial analyst, risk management officer, manager of financial planning, and compliance and internal control officer.

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