What is NIFTY?

Here’s a little background before I explain more about NIFTY. Among the 20 top stock exchanges in the world is the National Stock Exchange in Mumbai, India. When I say ‘top’, that means in terms of market capitalization. Also, this stock exchange is the top one in India in terms of daily turnover, for both derivative and equity trading. As of July 2012, the NSE had a market capitalization of close to US $1 trillion. The NSE uses an index of 50 major stocks, each weighted in terms of the market capitalization. This index is called S&P CNX Nifty, and referred to more often as simply NIFTY, the idea being to connote National Stock Exchange Fifty.

With a growth rate of 16.65, NSE is the second fastest growing stock exchange in the whole world. Here are some more facts to explain why NSE is such an important name in terms of the country’s stock markets, as well as the global financial market. With NSE VSAT terminals covering more than 1500 cities in the country, as per 2006 data, NSE is easily the widest reaching stock market in India. In 2011, NSE was found to be the 3rd largest stock exchange on the globe, in terms of its 1221 million contracts traded in equity. The management and ownership of the NSE is entirely separated. The ownership goes mutually to banks, insurance institutions, financial bodies and several other financial intermediaries. There is certain foreign stake as well, with Goldman Sachs and NYSE Euronet being prime investors. Let me take you back to NIFTY now. I mentioned that NIFTY is an index of the top 50 stocks listed in the National Stock Index. What’s great about this index is that it is very well diversified, in the sense that these 50 stocks are spread over 21 industries.

Let me tell you about India Index Services and Products Ltd. (IISL) here. This is a joint venture of CRISIL and NSE, and is the first specialist Index company in India. World’s most renowned indexing service, Standard and Poor’s (S&P) has a marketing and licensing agreement with IISL. Why am I telling you about IISL here? The reason – it owns the NIFTY. This index, the NIFTY, is primarily used for benchmarking index funds and index dependent derivative trading. Stocks on NIFTY constitute as much as 50% of the total trade volume in NSE. Here’s more – the impact cost of Nifty index on S&P CNX Nifty index is 0.15%, on a portfolio size of Rs 2 cores.

Here is a list of Nifty stocks:

Company Name	Industry	Symbol
ABB Ltd.	ELECTRICAL EQUIPMENT	ABB
ACC Ltd.	CEMENT AND CEMENT PRODUCTS	ACC
Ambuja Cements Ltd.	CEMENT AND CEMENT PRODUCTS	AMBUJACEM
Axis Bank Ltd.	BANKS	AXISBANK
Bharat Heavy Electricals Ltd.	ELECTRICAL EQUIPMENT	BHEL
Bharat Petroleum Corporation Ltd.	REFINERIES	BPCL
Bharti Airtel Ltd.	TELECOMMUNICATION – SERVICES	BHARTIARTL
Cairn India Ltd.	OIL EXPLORATION/PRODUCTION	CAIRN
Cipla Ltd.	PHARMACEUTICALS	CIPLA
DLF Ltd.	CONSTRUCTION	DLF
GAIL (India) Ltd.	GAS	GAIL
Grasim Industries Ltd.	CEMENT AND CEMENT PRODUCTS	GRASIM
HCL Technologies Ltd.	COMPUTERS – SOFTWARE	HCLTECH
HDFC Bank Ltd.	BANKS	HDFCBANK
Hero Honda Motors Ltd.	AUTOMOBILES – 2 AND 3 WHEELERS	HEROHONDA
Hindalco Industries Ltd.	ALUMINIUM	HINDALCO
Hindustan Unilever Ltd.	DIVERSIFIED	HINDUNILVR
Housing Development Finance Corporation Ltd.	FINANCE – HOUSING	HDFC
I T C Ltd.	CIGARETTES	ITC
ICICI Bank Ltd.	BANKS	ICICIBANK
Idea Cellular Ltd.	TELECOMMUNICATION – SERVICES	IDEA
Infosys Technologies Ltd.	COMPUTERS – SOFTWARE	INFOSYSTCH
Infrastructure Development Finance Co. Ltd.	FINANCIAL INSTITUTION	IDFC
Jaiprakash Associates Ltd.	DIVERSIFIED	JPASSOCIAT
Jindal Steel & Power Ltd.	STEEL AND STEEL PRODUCTS	JINDALSTEL
Larsen & Toubro Ltd.	ENGINEERING	LT
Mahindra & Mahindra Ltd.	AUTOMOBILES – 4 WHEELERS	M&M
Maruti Suzuki India Ltd.	AUTOMOBILES – 4 WHEELERS	MARUTI
NTPC Ltd.	POWER	NTPC
Oil & Natural Gas Corporation Ltd.	OIL EXPLORATION/PRODUCTION	ONGC
Power Grid Corporation of India Ltd.	POWER	POWERGRID
Punjab National Bank	BANKS	PNB
Ranbaxy Laboratories Ltd.	PHARMACEUTICALS	RANBAXY
Reliance Capital Ltd.	FINANCE	RELCAPITAL
Reliance Communications Ltd.	TELECOMMUNICATION – SERVICES	RCOM
Reliance Industries Ltd.	REFINERIES	RELIANCE
Reliance Infrastructure Ltd.	POWER	RELINFRA
Reliance Power Ltd.	POWER	RPOWER
Siemens Ltd.	ELECTRICAL EQUIPMENT	SIEMENS
State Bank of India	BANKS	SBIN
Steel Authority of India Ltd.	STEEL AND STEEL PRODUCTS	SAIL
Sterlite Industries (India) Ltd.	METALS	STER
Sun Pharmaceutical Industries Ltd.	PHARMACEUTICALS	SUNPHARMA
Suzlon Energy Ltd.	ELECTRICAL EQUIPMENT	SUZLON
Tata Consultancy Services Ltd.	COMPUTERS – SOFTWARE	TCS
Tata Motors Ltd.	AUTOMOBILES – 4 WHEELERS	TATAMOTORS
Tata Power Co. Ltd.	POWER	TATAPOWER
Tata Steel Ltd.	STEEL AND STEEL PRODUCTS	TATASTEEL
Unitech Ltd.	CONSTRUCTION	UNITECH
Wipro Ltd.	COMPUTERS – SOFTWARE	WIPRO