Trade the Nifty 50 index!
NIFTY 50

How to analyse the price of the Indian Nifty 50 stock index?

Trade the Nifty 50 index!
BUY   SELL
78% of retail CFD accounts lose money - eToro.com
 
Chart provided by Tradingview

Among the main stock market indices that can be traded online using derivatives such as CFDs, there are of course European indices such as the CAC 40 or the Dax 30, American indices such as the S&P 500, the Dow Jones or the Nasdaq 100, but also more exotic stock market indices such as the Nifty 50. The Nifty 50 is the benchmark index for the Indian stock market and in this article we will tell you more about its composition and how to analyse it.  

Elements to consider before investing in this asset

Analysis N°1

In particular, the stability of the Indian government will need to be studied as elected presidents and changes in parliament have in the past led to significant ups and downs in this index.

Analysis N°2

The financial sector, which accounts for nearly 30% of the index's composition, should also be closely monitored.

Analysis N°3

The various economic publications about the Indian economy are of course elements to be taken into account when analysing the Nifty 50 index. In particular, the industrial production index as well as the overall growth of the country will be monitored.

Analysis N°4

The performance of international markets, such as international news, also has a direct impact on movements in other global indices, including the Nifty. Since there is an almost constant correlation between the various international stock indices, the Nifty also reacts when a stock index behaves in a certain way.

Analysis N°5

Finally, the relationship between India and other countries from an economic or geopolitical point of view is also an element that can influence the price of this stock index.

Trade the Nifty 50 index!
78% of retail CFD accounts lose money. This is an advert for trading CFDs on eToro

What is the Nifty 50 stock index?

The Nifty 50 is currently one of the two major stock indices in India. In fact, it is the benchmark stock index for the Indian stock market that is most frequently used by online brokers.

This index gives us a representation of a well-diversified weighted average of 50 of India's most profitable listed companies across 12 different industries.

The Nifty 50 stock index was created in April 1996 and is made up of various Nifty stock indices. The Nifty 50 is also an index owned and managed by India Index Services and Products or IISP.

In the past and from 2008 to 2012, the share of the 50 index in the overall market capitalisation of India has declined dramatically from 65% to 29%. This decline is mainly due to the rise in the share of other sectoral indices in the country.

 

How is the Nifty 50 index price calculated?

Before knowing how you can analyse the value of the Nifty 50 stock index, it is also important to understand how its price is calculated.

The Nifty 50 is a free float-adjusted stock index. Before 2009, the index was calculated using the full market capitalisation method.

When the Nifty 50 was created, its base value was set at 1000 points. Its base capital was then Rs. 2.06 trillion.

As far as the calculation of the price of a Nifty 50 is concerned, it is calculated using the free float market capitalisation method. Thus, the price level of the Nifty 50 index actually indicates the total market value of all the constituents in relation to the base value as of 3 November 1995, when it was first issued. 

The formula applied to calculate the index value is therefore as follows: 

Value of the Nifty 50 = current market value / base market capital x value of the base index (1,000 points)

 

What is the composition of the Indian Nifty 50 stock index?

Before you start speculating on the price movement of the Nifty 50 index, it is of course important to understand its composition. As you will have gathered, the index is made up of 50 stocks of companies listed on the Indian stock market, from among the largest capitalisations and from the 12 main sectors of activity in the country.

We will not list all 50 companies here, but here is an overview of the companies that have the greatest weight in the index:

It is also interesting to know the distribution of the different Indian business services in the course of this index with :

Frequently Asked Questions

How can I invest in the Nifty 50?

Of course, it is not possible to buy the Nifty 50 in the same way as you would buy a share on the stock market. However, it is possible to speculate on the rise or fall of this stock market index by using derivatives such as CFDs or contracts for difference. These will replicate the upward or downward performance of the stock market index.

What is the stock market in India called?

The stock market in India is called the National Stock Exchange of India. It is also often referred to as NSE. The headquarters of this stock market is currently located in Mumbai and it is a nationwide electronic market that provides services to investors for the exchange of capital or trade in financial products.

How to perform a technical analysis of the Nifty 50?

Technical analysis of the Nifty 50 stock index will use historical and current stock charts to detect any significant movements. Customisable charts will be used for this purpose, on which it is possible to add technical indicators such as trend indicators or volatility indicators. Of course, technical analysis should not be used on its own but in addition to a good fundamental analysis of the Nifty 50 stock index.

Trade the Nifty 50 index!

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail CFD accounts lose money. You should consider whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.