How to Invest in NIFTY 50 via Zerodha | Nifty Weightage Stocks | How the Stocks are Selected in NIFTY 50?
NIFTY 50 in Zerodha
In this article, we will discuss how to invest in NIFTY 50 via Zerodha? But getting into it let’s understand what does NIFTY50 means and what benefits you will derive from it?
Many times you come across the term NIFTY50 in the newspaper or on the news channel. Let me tell you Nifty is a combination of two words i.e., “National Stock Exchange” and “Fifty”. Therefore, Nifty represents a collection of the top 50 equity stocks that are actively trading on NSE.
In other words, Nifty 50 is a benchmark index that represents India’s top 50 large-cap companies that are ruling the respective sectors. Initially, people use to refer to CNX NIFTY now commonly known as NIFTY 50. These 50 companies are from different sectors hence representing the stock market and economic trends of India. Generally, NIFTY 50 tracks the performance of these large-cap companies out of more than 1900 companies listed on NSE as of March 31st,2021.
Nifty 50 is used as a benchmark for many mutual fund schemes. One can invest in Nifty50 via index funds or ETFs. The returns you generate from these schemes will be in line with the economic growth of the country.
How NIFTY 50 Works?
As explained above, Nifty moves whenever the top 50 companies in the kitty move in proportion to the weightage allotted to each stock basis free-float market cap. This weightage gets calculated on the adjusted free-float market capitalization of the top 50 performing stocks. Here is the list of Nifty 50 stocks list attached with their weightage.
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Nifty Weightage Stocks
|Reliance Industries Ltd.||Petroleum Products||10.68%|
|HDFC Bank Ltd.||Banks||9.01%|
|ICICI Bank Ltd.||Banks||7.24%|
|Housing Development Fin. Corp. Ltd.£||Finance||6.68%|
|Tata Consultancy Services Ltd.||Software||4.58%|
|Kotak Mahindra Bank Limited||Banks||3.88%|
|Hindustan Unilever Ltd.||Consumer Non-Durables||2.78%|
|Larsen and Toubro Ltd.||Construction Project||2.78%|
|Bajaj Finance Ltd.||Finance||2.56%|
|ITC Ltd.||Consumer Non-Durables||2.54%|
|State Bank of India||Banks||2.51%|
|Axis Bank Ltd.||Banks||2.49%|
|Bharti Airtel Ltd.||Telecom – Services||2.11%|
|Asian Paints Limited||Consumer Non-Durables||1.82%|
|HCL Technologies Ltd.||Software||1.62%|
|Bajaj Finserv Ltd.||Insurance||1.40%|
|Tata Steel Ltd.||Ferrous Metals||1.34%|
|Maruti Suzuki India Limited||Auto||1.29%|
|Titan Company Ltd.||Consumer Durables||1.29%|
|Tech Mahindra Ltd.||Software||1.19%|
|UltraTech Cement Limited||Cement & Cement Products||1.15%|
|Tata Motors Ltd.||Auto||1.13%|
|Sun Pharmaceutical Industries Ltd.||Pharmaceuticals||1.12%|
|Mahindra & Mahindra Ltd.||Auto||1.10%|
|Indusind Bank Ltd.||Banks||0.90%|
|Nestle India Ltd.||Consumer Non-Durables||0.88%|
|Hindalco Industries Ltd.||Non – Ferrous Metals||0.87%|
|Grasim Industries Ltd.||Cement & Cement Products||0.86%|
|JSW Steel Ltd.||Ferrous Metals||0.86%|
|Divis Laboratories Ltd.||Pharmaceuticals||0.85%|
|HDFC Life Insurance Company Limited||Insurance||0.82%|
|Power Grid Corporation of India Ltd.||Power||0.82%|
|Dr. Reddys Laboratories Ltd.||Pharmaceuticals||0.74%|
|Oil & Natural Gas Corporation Ltd.||Oil||0.71%|
|Adani Ports & Special Economic Zone||Transportation||0.66%|
|SBI Life Insurance Company Ltd.||Insurance||0.66%|
|Bajaj Auto Limited||Auto||0.63%|
|Tata Consumer Products Limited||Consumer Non-Durables||0.63%|
|Britannia Industries Ltd.||Consumer Non Durables||0.56%|
|Bharat Petroleum Corporation Ltd.||Petroleum Products||0.52%|
|Shree Cement Ltd.||Cement & Cement Products||0.50%|
|Coal India Ltd.||Minerals/Mining||0.45%|
|Eicher Motors Ltd.||Auto||0.45%|
|Hero MotoCorp Ltd.||Auto||0.45%|
|Indian Oil Corporation Ltd.||Petroleum Products||0.42%|
How the Stocks are Selected in NIFTY 50?
For the stock to get listed in Nifty, it needs to satisfy the eligibility criteria set by the National stock exchange. Please find the criteria below:
1)Company should have a free-float market cap of at least 1.5times higher than the average free-float market cap of the smallest company in the index.
2) The company must have a permanent office in India and shall be listed and traded on NSE.
3) It should have 100% trading frequency in the last six months.
4)Company stock should be available for trading in the futures/option segment as well.
5) In the last six months, it should at least be traded at a market impact cost less than or equal to 0.50% or trade worth of Rs.10crores.
How to Invest in NIFTY 50?
To invest in Nifty 50 there are two avenues by which you can invest on Zerodha is ETF or Mutual funds tracking the Nifty 50 index. Let’s discuss these two avenues first then will discuss the steps of investment.
ETFs refer to an exchange-traded fund. But one cannot directly invest in an Index. Hence, to get the exposure of NIFTY 50 you can take the route of ETFs. Simply buying an ETF that is benchmarked against NIFTY 50, will help you to invest in the index itself. ETFs, combine the features of stocks and mutual funds. Above all, they are supposed to trade throughout the day at a price based on demand and supply. Above all, ETFs come with a low expense ratio as they get passively managed by fund managers.
It is a pool of investment by an AMC from investors to invest in stock, bonds, index & other assets.
These funds are there to mirror the returns of NIFTY50. Most importantly, these funds are free from the fund’s manager biases as it gives a truly automated equity portfolio of top 50 companies based on their market cap. Even Warren Buffett has suggested Index fund to retail investors to churn inflation-beating returns.
Steps to Invest in NIFTY 50 via Zerodha ETF
Time needed: 1 minute.
Buying NIFTY 50 on Zerodha through ETFs route
- Go to the login page and sign in
Firstly enter your username and password. Then, key your PIN to log in to the dashboard. Here is the URL for login: https://kite.zerodha.com/
- Search for NIFTYBEES on Dashboard
On top, you can see NIFTY50 is displaying but there is no buy or sell option as it’s just an indie. To invest in NIFTY 50 ETF, you can search for NIFTYBEES’ best-performing stock of NIPPON India matching the returns of NIFTY50.
- Select NIFTYBEES NSE ETFs
Choose NIFTYBEES from the one reflected in the dropdown indicating NSE one. Further select buy option.
- Enter your Buy Details
On the Buy screen, you can select the quantity of stocks to buy for NIFTYBEES. In case you want to do daily trading then choose Intraday or else choose CNC for long-term investment. Moreover, select the quantity if want to buy at the current market rate then choose the Market radio button to execute the order immediately. On the other hand, choose Limit in case you want to buy at a certain price and then click on Buy Button.
- Go to Orders
Now the order is placed so go into the order section and check under pending order as you have chosen Limit. Once the price reaches 150 then only this order will be executed or else remain in pending orders. At any point in time, if you wish to cancel this order you will have the cancel option.
Invest NIFTY 50 via Zerodha MF Route
Use this URL to log in on coin platform: https://coin.zerodha.com/
It will show all your investment made via Coin App.
Now search the keyword NIFTY 50 to pull out the list of funds tracking Nifty50 and compare the performance with the peers.
I have chosen HDFC Nifty 50 Index fund, you can check the min investment amount, exit load, launch date, Rate of return for the last 5 years. In addition, you can compare with its peer.
In case you’re confused between two or more funds then click on compare funds. As a result, it will pull comparative analysis on varied factors to let you decide which one is better.
Post your thorough analysis, choose the right fund as per your objective and edit the amount for which you like to invest for one time. After that, click on Buy Button.
Once you click on confirm and invest, it will redirect you to the HDFC MF site and will get the successful message of placing the order.
Hope you like the article, in case you’re facing difficulty in investing in NIFTY50 via ETFs or MF route please email us for any queries.
You can cancel the order until it’s pending at the Mutual fund house end. You will see the delete button in the order section.
Click on + sign coming at the end of the searched option and it will add your watchlist.