What is Nifty?
Nifty is a popular Stock index introduced by the National Stock Exchange of India. It operates under the management of NSE Indices Limited, previously known as the India Index Service & Products Limited (IISL).
The word “Nifty” means “National Stock Exchange Fifty,” and it is the combination of “National Stock Exchange” and “fifty.” You can also refer to the Nifty50 or the CNX Nifty since it is a collection of the top 50 equity stocks actively traded on the stock exchange out of a total of 1600 stocks.
The Nifty index includes a variety of indices. These are —
- NIFTY BANK
- NIFTY Next 50
- NIFTY IT
- NIFTY Small Cap
It consists of the following financial products
- Index funds
- Index futures and options (F & O)
- Stock futures and options, etc.
The Nifty index includes only 50 blue-chip companies and represents about 66.8% of the NSE’s free-float market capitalisation. Free-float represents the total number of stocks available to trade publicly.
How is Nifty calculated?
Financial professionals manage the Nifty index at the NSE Indices Limited. The top 50 companies in the Nifty index are not permanent. The index is calculated on a real-time basis as the value of stocks changes every instant. The Nifty share price is updated daily by NSE professionals.
The formula for calculating the Price Index is given below:
Index value = Current market value / (Base Market Capital * 1000)
Market capitalisation = Shares Outstanding * Current Price
Scrip selection criteria in Nifty.
The selection of the Nifty 50 companies is based on free-float market capitalisation. These companies must fulfil specific criteria. The following are some criteria for Scrip selection in Nifty:
- Only companies with their headquarters in India listed on the National Stock Exchange are considered for the index.
- The companies should have high liquidity. Liquidity is estimated by the average impact cost of the companies.
- The trading frequency for the company should be 100% during the past six months.
- The eligible companies must have an average free-floating market capitalisation.
- Float-Adjusted Market Capitalization: Eligible companies must have at least double the float-adjusted market cap of the index’s current, most minor constituent.
- A firm that comes up with an Initial Public Offering [IPO] is qualified for incorporation into the Nifty index if it manages to satisfy the specific qualification standards for the index float-adjusted market capitalisation for three months rather than a six-month term.
- Stocks of the eligible company must also be available for trading in the NSE’s Futures & Options (F&O) segment.
Conclusion
The Nifty is a benchmark standard that represents the strength of the Indian Stock Market. You can get updates about the Stock Market’s current trends and invest accordingly. Many factors can affect the Nifty share price.
Hence, investors can check the Nifty share price from the available sources in the market before investing and trading. It is essential to know that the source you’re using is trustworthy and authentic.
That is why you should opt for the Nifty chart from a trustworthy firm like IIFL Securities. The IIFL Markets app by IIFL Securities allows you to check out the real-time Nifty share price through Nifty charts.
You will receive detailed information about the top-performing companies. They help you with market price updates that include Nifty share price to ensure that you don’t lose any opportunity.
