What is Nifty 50 and Nifty Index? Learn With FxLifeStyle


What is Nifty 50?

The Nifty 50 was a list of Stocks during the 60s and 70s which had solid earnings growth and high price to earnings ratio. Many large institutions recommended these stocks to their clients as life long buy and holds. The fifty stocks where all large caps on the New York Stock Exchange. Nifty is one of the leading index in the Indian stock market and the prime index of the NSE. If you consider all the stocks in the NIFTY it accounts for almost 50% of the total traded volume in the NSE.

History:

Another reason the Nifty 50 was coined “50” was because the majority of the stocks on the list had price to earnings ratio of 50 or more. These stocks lost their luster during the bear market of 1973-1974, where these stocks were crushed in a matter of months. This sharp decline was changed the views of institutions on these stocks overnight, and the Nifty50 was all but forgotten. It wasn’t until after the 87 crash through the late 90s did investors once again buy these stocks for long term investments and not for quick swing gains.

About : NIFTY 50:-

The Nifty 50 was a group of the 50 most popular large cap stocks on the New York Stock Exchange in the 1960s and 1970s. The group included Walt Disney, Dow Chemical, IBM and McDonald’s. Nifty 50 stocks were widely regarded as solid buy-and-hold equities and the companies in the group were characterized by consistent earnings growth and high P/E Ratios. In addition, the Nifty 50 stocks were credited with propelling the bull market of the early 1970s.

Due to their marked stability, Nifty 50 stocks were viewed as “one-decision” picks because investors were told to buy and hold them forever. In February 2008, Wall Street giant UBS devised the New Nifty 50, an expanded version of the list, which now includes international companies like Toyota, Samsung, Nokia and Swatch. The inclusion of international companies on the New Nifty 50 allows investors to take advantage of the solid returns and stability of companies in the UK, Japan and some European countries.

What is Nifty Index?

Nifty is a prime index of the ‘The National Stock Exchange of India Limited’, the Mumbai based Stock Exchange.NSE is the largest stock exchange in India in terms of daily turnover and trading volume in both equity and derivative trading. NSE is owned by the premiere financial institutions, banks, insurance companies and other financial intermediaries in India. But the ownership and the management of the exchange work as separate entities. The NSE S&P CNX Nifty 50 that is popularly known as NIFTY is the key index of the NSE.

NIFTY is an index that is made of 50 major stocks listed at the NSE in terms of market capitalization. NIFTY is a well diversified index as these 50 companies are from 21 sectors. The index is owned and managed by India Index Services and Products Ltd. (IISL). IISL, which is a joint venture of NSE and CRISIL is the first specialized company in India on Index. The company has a marketing and licensing agreement with Standard & Poor’s (S&P) – the world market leader in index services. The NIFTY index is used for different purposes like benchmarking fund portfolios, index based derivative trading and index funds.

Some major Nifty 50 indexes are:

Below is the list of stocks from the Nifty 50:

American Express, American Home Products, AMP Inc., Black & Decker, Bristol-Myers, Burroughs Corporation, American Hospital Supply Corp., Chesebrough-Ponds, Dow Chemical, Eastman Kodak, Eli Lilly and Company, Emery Air Freight, First National City Bank, General Electric, Gillette, Halliburton, IBM, J.C. Penney, Johnson & Johnson, Lubrizol, McDonald’s, Merck & Co., PepsiCo, Pfizer, Philip Morris Cos., Polaroid, Procter & Gamble, Revlon, Schering Plough, Joe Schlitz Brewing, Schlumberger, Sears, Roebuck and Company, Simplicity Patterns, Squibb and so on.

Whenever the index may be rising or not, if you are with the best of the advisory firm, be assure that it will provide you the best Stock Tips.

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