NIFTY

NIFTY is a market index introduced by the National Stock Exchange. It is a blended word – National Stock Exchange and Fifty coined by NSE on 21st April 1996. NIFTY 50 is a benchmark based index and also the flagship of NSE, which showcases the top 50 equity stocks traded in the stock exchange out of a total of 1600 stocks.

These stocks span across 12 sectors of the Indian economy which include – information technology, financial services, consumer goods, entertainment and media, financial services, metals, pharmaceuticals, telecommunications, cement and its products, automobiles, pesticides and fertilizers, energy, and other services.

NIFTY is one of the two national indices, the other being SENSEX, a product of the Bombay Stock Exchange. It is owned by the India Index Services and Products (IISL), which is a fully-owned subsidiary of the National Stock Exchange Strategic Investment Corporation Limited.

NIFTY 50 follows the trends and patterns of blue-chip companies, i.e. the most liquid and largest Indian securities.

NIFTY contains a host of indices – NIFTY 50, NIFTY IT, NIFTY Bank, and NIFTY Next 50; and is a part of the Futures and Options (F&O) segment of NSE which deals in derivatives.

The eligibility criteria for getting listed on the NIFTY Index are mentioned below –

• The company must be a domicile of India and registered with the National Stock Exchange.

• Stocks must possess high liquidity, which is measured by their average impact cost. It is the cost of security transaction execution in relation to the index weight as reckoned through market capitalisation. It should be 0.50% or lower than that for a period of 6 months while 90% of the observations are made on a portfolio of Rs. 10 Crore.

• The company should have a trading frequency of 100% during the previous six months.

• It should have an average free-floating market capitalisation, which is 1.5 times higher than the smallest constituent in the index.

• Shares which have Differential Voting Rights or DVR are also eligible for the index.

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