The NiftyIndices Overview

Niftyindices are managed by NSE Indices Ltd., a subsidiary of the National Stock Exchange of India Ltd., set up in May 1998 to provide index-related services for the Indian capital market.

It was the first specialized company in India that focused on an index as its core product, covering all the economic sectors in both equity and debt markets and providing relevant market data to market participants for equity and derivatives trading. NSE Indices manages over 350 indices in 13 different equity and fixed-income categories.

The following are different types of Nifty index categories:

  • Broad-based Index
  • Sectoral Index
  • Thematic Index
  • Strategy Index
  • G-Sec Index
  • Sovereign Green Bond Index
  • SDL Index
  • Corporate Bond Index
  • Municipal Bond Index
  • Money Market Index
  • Target Maturity Index
  • Fixed-Income Aggregates Index
  • Multi-asset Index

Evolution of NiftyIndices- History and Milestones

These indices are very young compare to their global counterparts. For instance, the world’s most extensive index based on the market capitalization of their constituents- the Dow Jones Industrial Average was first introduced on May 26, 1896. Similarly, S&P Global was launched in 1957, and Nasdaq 100 was established in 1985.

While its Indian counterpart, the BSE Sensex, considered the pulse of India’s domestic stock market, was first introduced on January 1, 1986.

Launch of Nifty 50

On April 22, 1998, NSE Ltd. launched its first index, the Nifty50, comprising 50 large and liquid stocks listed on the NSE. This index was initially known as the CNX Nifty. Over the years, it has emerged as one of India’s most tracked equity indexes globally. Moreover, the index has become one of India’s largest financial products through constant innovations.

On June 12, 2000, NSE commenced trading Nifty50 Index Futures, followed by the launch of Nifty Index Options on June 4, 2001. The derivatives trade on the National Stock Exchange (NSE), Singapore Stock Exchange (SGX), and Chicago Mercantile Exchange (CME).

NSE Indices Ltd.

NSE Ltd. established NSE Indices Ltd as a joint venture with CRISIL Ltd. in May 1998 To strengthen its index offering. However, in August 2013, CRISIL Ltd. exited the JV and sold its 49% stake to NSE Strategic Investment Corporation Limited.

Expanding Index Offerings

NSE Indices continued to bring innovation into its index offerings and services by launching many new index categories. Apart from equity indices, fixed-income indices like the Corporate Bond indices, G-Sec Indices, and many more indexes were introduced over the years.

Trading in Bank Nifty Index Derivatives introduced and is currently one of the market’s most actively traded index derivatives.

Who Manages The Niftyindices?

A professional team manages Nifty Indices and has a three-tier governance structure comprising the Board of Directors of Nifty Indices, the Index Advisory Committee, and the Index Maintenance Sub-committee.

The Index Policy Committee is involved in the policy and guidelines for managing the Nifty Equity and Fixed Income indices. And the Index Maintenance Committee involve in the decision-making of addition and deletion of the company in any index.

An additional index committee, the Index Oversight Committee, looks after the index design and methodology to ensure that the index reflects the nomenclature and description.

Uses of Nifty Indices

These Indices uses for a variety of purposes, and the most significant are:

Benchmarking: These indices act as a benchmark for investment portfolios and allow investors to gauge how well their investments have fared compared to the overall market.

Launching of Index Funds and ETFs: It helps mutual fund houses establish index funds and ETFs, helping users invest in the broader market without worrying about stock selection and outperforming the market.

Build Structured Investment Product: Indices help investment professionals to build structured investment products and provide critical insights into the market and emerging trends.

Niftyindices – Innovation in Wealth Creation Journey

Over the years, indices have played a crucial role in investment decision-making, providing key insights and managing risk effectively.

These indices have brought innovation-driven investment processes providing several benefits and valuable tools for investors in their investment journey. For example, various indices in equity and fixed-income categories are helping investors and other market participants in accurate performance measurement. Market analysis, asset allocation, passive investing, risk management, and investment research.

In short, Nifty Indices have played a pivotal role in streamlining investments, fostering transparency, accessibility, and efficiency in the Indian investment landscape. They have enabled investors to make informed decisions and participate in the growth potential of various market segments, contributing significantly to their wealth creation journey.

FAQs

What is the Nifty 50 and Nifty 100?

Nifty50 and Nifty100 are diversified stock indexes that include the top 50 and top 100 companies of India. Respectively, selected based on free-float market capitalization and liquidity of stocks.

How many Nifty indices are there?

Combining both the categories- Equity and Fixed Income, there are over 350 Nifty indices as of April 28, 2023.

What are the utilities of Nifty Indices?

Nifty indices used in investment research, portfolio benchmarking. Launching ETFs and index funds, building structures investment products, and risk management.