Full Form of NIFTY
National Stock Exchange Fifty
NIFTY Full Form is National Stock Exchange Fifty. Nifty is India’s major stock index and was introduced by the National Stock Exchange. This term is coined by joining the words ‘National’ and ‘fifty’, which refers to the 50 active company stocks it comprises of. In simple words, Nifty or Nifty 50 is a benchmark stock index for NSE or National Stock Exchange.
It is an average of the 50 companies listed on the NSE. Nifty futures contracts are one of the most traded in India. It even overtakes the Sensex futures. Nifty was started in 1995 with a base of 1000. Currently, it has reached around 6000. As of 2012, it had 50 best Indian companies in the list. It’s weighted average of 50 best stocks from about 24 sectors.
NIFTY Full Form – Additional Information
One of the landmark indices that the National Stock Exchange (abbreviated as NSE) has come up with in the stock exchange market is NIFTY 50. The index has been created specifically for the Indian equity market. The India Index Services and Products (abbreviated as IISL) is the body that owns and manages the index and is a subsidiary wholly owned by the NSE Strategic Investment Corporation Limited. The body has engaged itself in a licensing and marketing agreement for the branding of equity indices till the year 2013 with Standard & Poor’s.
The Index presently covers about 22 sectors in the Indian economy. It makes provision of offers to investment managers greater exposure in the stock exchange market. The index provides for differential weightage to different sectors. For example, it gives 0.73 percent weightage to industrial manufacturing sectors; 29.70 percent weightage to financial services sectors; and zero weightage to agriculture and associated sectors.
NIFTY 50 was originally evaluated on the basis of full market capitalization method but however, post 26 June 2009, there is a switch to free float methodology. The index regards 3rd November 1995 as the base year, which marks the one-year competition of the NSE Equity Market Segment. The current base value of the index has been placed at 1000 whereas the base capital has been placed at Rs. 2.06 trillion.
There are many aspects involved in the organization, functions, and whatnot of NIFTY 50, which is a very important index both in India and abroad. Therefore, the following heads shall be dealt with some of the many important things about the index so that there are greater appreciation and elucidation on the subject-matter concerned. Here are five points about NIFTY 50, which everyone must know about:
Brief history behind the emergence of NIFTY 50
NIFTY 50 index was previously called the S&P CNX Nifty Index. However, in the year 2013, the name of the same was changed to NIFTY 50, also known as CNX Nifty 50. The change in the name was in pursuance to the expiration of the agreement that was entered between the India Index Services and Products and the Standard & Poor’s Financial Service (S&P). The agreement had expired on January 31, 2013. As of the year 2015, the NIFTY 50 index gives representation to 66.17 percent of the free float market capitalization of all the stocks listed on the NSE up till 31st March 2015. Enumeration of the companies that form part of NIFTY 50 index.
Under this head, some of the companies that together form the NIFTY 50 have been listed below:
- Cipla Ltd. (abbreviated as CIPLA)
- Bharat Heavy Electricals Limited (abbreviated as BHEL)
- Housing Development Finance Corporation Ltd. (abbreviated as HDFC)
- Reddy’s Laboratories Ltd. (abbreviated as DRREDDY)
- Bharat Petroleum Corporation (abbreviated as BPCL)
- Grasim Industries Ltd. (abbreviated as GRASIM)
- PowerGrid Corporation of India Ltd. (abbreviated as POWERGRID)
- Sun Pharmaceutical Industries Ltd. (SUNPHARMA)
- Zee Entertainment Enterprises Ltd. (abbreviated as ZEEL)
- Tata Consultancy Services Ltd. (abbreviated as TCS)
- Oil & Natural Gas Corporation Ltd. (abbreviated as ONGC)
- Larsen & Toubro Ltd. (abbreviated as LT)
- Hindalco Industries Ltd. (abbreviated as HINDALCO)
- Adani Ports & SEZ Limited (abbreviated as ADANIPORTS)
- Maruti Suzuki India Ltd. (abbreviated as MARUTI)
- Punjab National Bank (abbreviated as PNB)
- Kotak Mahindra Bank Ltd. (abbreviated as KOTAKBANK)
- Ambuja Cements Ltd. (Abbreviated as AMBUJACEM)
- Bank of Baroda (abbreviated as BANKBARODA)
- Hindustan Unilever Ltd. (abbreviated asHINDUNILVR)
- IndusInd Bank Ltd. (abbreviated as INDUSINDBK)
- State Bank of India (abbreviated as SBIN)
- UltraTech Cement Ltd. (abbreviated as ULTRATECH)
- Idea Cellular Ltd. (abbreviated as IDEA)
There are a few companies that have not been mentioned in the above list. A total number of participating companies in the index is 50 and every one of them is a key player in its respective market. These companies are known to exercise greater controls on the economy of the country and therefore, are prime companies of the country. Now we move to other important aspects of NIFTY 50 and rest the preceding discussion to rest.
Maintenance of the Index
It has been repeatedly mentioned that the IISL takes care of the index though there is no mention of the mechanism of such control and maintenance. The IISL has established a committee by the name Index Policy Committee, which is engaged in drafting guidelines and policies for the maintenance of CNX indices. There is another committee, which is often referred to as the Index Maintenance Subcommittee, which is responsible for taking all necessary decisions regarding inclusion or exclusion of the companies from any of the CNX indices. Thus, these two committees together take on the uphill task of maintenance of the index.
Major falls suffered by NIFTY 50
There were some major single day falls that NIFTY 50 suffered and some of them have been listed below:
During the Asian Financial Crisis that occurred in the year 1997. The crisis resulted in overheating of Hong Kong Stock Market and caused crashes in stock exchanges of countries such as South Korea, Thailand, Philippines, Indonesia, etc. On 16 August 2013, the index witnessed a heavy fall by 234.45 points. On 27 August 2013, the index witnessed fall by staggering 189.05 points. On 6 may, 2015, the index witnessed the biggest single day fall that went below 8200 level.
Reputation and other miscellaneous facts
NIFTY 50 is an internationally reputed index and is regarded as the biggest financial product that India has produced. The index is attributed with a balanced ecosystem, which covers exchange traded options and futures (which happens at NSE and in abroad, at Singapore Exchange and Chicago Mercantile Exchange & Chicago Group of Trade); exchange traded funds (includes both offshore and onshore); OTC derivates that are usually offshore; and other index funds. It is important to note that NIFTY 50 is currently the most actively traded contract in the world and many surveys including the ones by WFE, FIA, and IOMA vouches for the exemplary position of NSE in the world stock exchange market.