1. Finance

How to invest in Nifty 50? A guide

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Nifty 50 is the benchmark indices of the National Stock Exchange which reflects the overall movement of the Indian stock market. It includes the top 50 large-cap companies in India. These companies are leaders in their respective sectors, and the most reputed and biggest companies can be a part of this index.

So, when you invest in the Nifty 50 Index, you become a part-owner of these fantastic companies. However, if you are clueless about how to do that, the following details form a guide for your reference.


How to invest?

To invest in the Nifty 50, you can either buy stocks directly in the precise percentage as their weightage in the Nifty 50 index or opt for the Nifty 50 Index Fund. The first option may turn out challenging and complicated. It can also become expensive as you need to buy the complete list of stocks and not a fraction of it.

Meanwhile, investing in a Nifty 50 today lets you take advantage of an Index Fund that replicates the Nifty 50 and tracks it. Hence, it has the same portfolio of 50 stocks and in the exact proportion as the Nifty 50.



The most important benefits of investing in Index Funds that mimic and track the Nifty 50 include the following:

  • Since these are Mutual Funds, you can invest in them as a Lumpsum Investment or make small contributions periodically through a Systematic Investment Plan. This flexibility makes these funds convenient, especially for those who do not have enough money to begin their investment journey.
  • It is generally handled by a professional fund manager who maintains your investments in the same proportion as the index. They also decrease or increase the weightage of a specific stock. Hence, you need not worry about tracking and maintaining or rebalancing the stocks in the same proportion as the Nifty 50.
  • The Sensex today allows you to invest in an Index Fund that mimics the Nifty Next 50 Index. This includes the companies in the Nifty 100 index after excluding the stocks under the Nifty 50. Similarly, when you opt for a Nifty 50 Index Fund, you can opt for an Index Fund replicating the Nifty 50 Index.
  • This eliminates the need for fund managers to make tactical decisions regarding which stocks to purchase, when to sell or buy them, etc. This also makes Mutual Fund management affordable and lowers the investors' costs.
  • Such Index Funds have a rule-based and automated investment method. The fund manager also has a well-defined mandate on how much and which stocks to buy. This removes the problem of errors due to human biases.


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