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What is Nifty?

Nifty is the index of National Stock Exchange (NSE). It is derived from top 50 companies of NSE based on its market capitalization. Major stock exchanges have the habit of putting top performance based companies under one group. As such, Nifty 50 originated with 50 top performing companies of India with highest market capitalization and turnover. Weightages are given to said 50 companies which constitute a total of 100%. A base value of 1000 was given at the time of its derivation, November 3rd 1995, totaling all 50 top companies base values which was later increased incredibly almost to 6000 due to over performance of top 50 companies, thus markets.

This is also called as S&P CNX NIFTY as its maintained by India Index Services and Products Ltd which is abbreviated as IISL which owns a licensed agreement with Standard and Poor’s (S&P) index services. Index allows to trade in Cash, Futures and Options Segment.

Stock market indexes commonly are calculated by any of two types – Market capitalization weighted index or Price weighted index. In the former type of calculation, each stock market capitalization effects the index value where as in the latter one, the stock price influences the index because of which it is said as price weighted index. Recently many major world exchanges shifted their index calculation to a new method called “Free Float capitalization”.

Keypoints of article:

Nifty is the index of NSE.
Index was grouped from 50 large cap companies.
Index of NSE started with a base value of 1000.
As stock trading, index can also be traded in cash, futures and options
NIFTY is derived from 2 words – NSE and FIFTY
Maintained by Stadard and poor
Calculated using Free Float Capitalization
NSE’s Index is derived from 23 sectors
Largest index to be traded in terms of volume and contracts.

Posted By: Pankaj                 Posted on: 2016-08-24 11:58:05                 Updated on: 2016-08-24 11:58:05