Why are These 6 NSE Index Referred the Most in Share Market?

In online trading, you might wonder why some specific NSE indexes, also known as indices, hold so much importance. These indices, like Nifty 50, Bank Nifty, etc, are the talk of the share market town. They act as crucial indicators, reflecting the performance of different sectors.

Whether you’re a new trader or an experienced trader, understanding why these indexes matter can be a game-changer for you to do online trading.

Let’s understand the top 6 NSE indexes that are widely popular and in use in the share market.

1. Nifty 50

Nifty 50 is a significant stock market indicator in India, consisting of 50 large and influential companies. Some popular companies are Reliance Industries, TCS, HDFC Bank, ICICI Bank, and Infosys. It’s like a snapshot of the overall stock market, helping traders understand how well the biggest players are performing.

As of September 29, 2023, This index represents approximately 59% of the free float market. Traders and fund managers often use the Nifty 50 as a benchmark to gauge the health of the Indian stock market and make decisions based on its trends.

To trade stocks, you can explore Nifty 50 and many more indexes your preferred trading app or an accessible platform offering user-friendly features and real-time market updates.

2. Nifty Next 50

The Nifty Next 50 is a large-cap index made up of 50 stocks. It’s kind of the next set of valuable stocks after the top 50, known as the Nifty 50. The Nifty Next 50 is managed by NSE Indices (previously known as India Index Services & Products Limited).

As of December 2023, some of the companies in the Nifty Next 50 index include ABB India, Adani Energy Solutions, Adani Green Energy, Adani Total Gas, Adani Wilmar, Ambuja Cements, and more.

When you combine the Nifty Next 50 with the Nifty 50, you get what’s called the Nifty 100. This is a list of the 100 most important and easy-to-trade stocks on the National Stock Exchange of India.

3. Nifty Bank

Nifty Bank, also known as Bank Nifty, is a stock index on the National Stock Exchange (NSE) of India. The index includes 12 stocks from the banking sector. Some of the top companies in Nifty Bank include Kotak Mahindra Bank, Federal Bank, State Bank of India, and HDFC Bank.

Comprising liquid and large-cap banking shares, it allows traders to track trends in the banking sector.

Widely followed by traders and traders, Nifty Bank serves as a key indicator for economic health and banking industry dynamics, influencing decisions in the broader market.

4. Nifty Midcap 100

Launched in July 2005, the Nifty Midcap 100 is not just a stock market index—it’s a barometer of the midcap segment’s health in the Indian market.

It ranks in the top 100 companies listed on the National Stock Exchange (NSE), representing about 12% of the free float market capitalization as of September 2023. The index’s weighty role is underlined by its approximate 19% contribution to the traded value of all stocks on the NSE in the same period.

With a diverse range of companies, it’s a playground for traders and investors looking to tap into the potential of mid-sized businesses. From Gujarat Gas Ltd, known for its robust presence in gas transmission, to LIC Housing Finance Ltd, a key player in housing finance, the index covers a spectrum of industries.

By offering a blend of stability and growth potential, the Nifty Midcap 100 index stands as a crucial index for those aiming to diversify their portfolio and tap into the dynamic world of midcap stocks​​​​​​.

5. Nifty Financial Services

The Fin Nifty index, focused on financial services, comprises 20 stocks from the financial sector.

Nifty Financial Services, or Fin Nifty, includes major financial companies like banks and insurance firms listed on the NSE in India. Notably, HDFC Bank, ICICI Bank, and HDFC collectively make up over half of the index.

Traders use Nifty Financial Services as a benchmark to assess the overall performance of the financial industry in the Indian market, helping in trading decisions and strategy formulation.

6. Nifty FMCG

The Nifty FMCG index is made up of the top 15 FMCG sector stocks. Nifty FMCG measures the performance of Fast-Moving Consumer Goods (FMCG) companies. It includes popular consumer brands in sectors like food, beverages, personal care, and household products.

This sector is fiercely competitive, featuring major companies like Tyson Foods, Coca-Cola, Unilever, Procter & Gamble, Nestle, PepsiCo, and Danone, driven by the rapid turnover of consumer goods.

Conclusion

In the Indian share market, the popularity of these six NSE indices lies in their representation of key sectors. You can rely on them to gauge market trends and make informed decisions about your trading and investing journey.  Do your research and trade wisely.