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NIFTY Next 50 is a broad index on the National Stock Exchange (NSE) that captures the movement in the 50 companies that come after excluding the top NIFTY 50 companies from the NIFTY 100 universe. These stocks span 16 sectors of the economy, with Financial Services, FMCG, Metals & Mining, and Consumer Services representing almost 52% of the index. Exposure to Chemicals, Power, Healthcare, Oil, Gas & Consumable Fuels, Construction Materials, Consumer Durables, IT, Capital Goods, Realty, Telecommunication, Services, and Automobile and Auto Components sectors can also be gained through NIFTY Next 50.
The NIFTY Next 50 index captures almost 12% of float-adjusted market capitalization on NSE. The total traded value of all index constituents is approximately 13% of the traded value of all stocks on NSE for the last six months.
This Next 50 index was launched on December 24, 1996, with the base year set to 1996, the base value at 1000 and 0.43 trillion rupees as base capital. It is reconstituted on a semi-annual basis. NIFTY Next 50’s share price has hovered around the levels of 38,000-45000 in the past 52 weeks.
The Next 50 index is governed by a three-tier structure which comprises the BOD of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee. NIFTY Next 50 index has a variant in the form of the NIFTY Next 50 Total Returns Index. This index is ideal for benchmarking of fund portfolios, index funds, ETFs, and structured products.
The NIFTY Next 50 share price is computed by weighting its 50 stocks on the basis of total free-float market capitalization relative to a particular base market value. Free float refers to the shares which are not held by promoters and are readily available to the public for trading.
The constituent stocks need to meet the following eligibility criteria:
The index value is calculated as follows –
Index value = Current free float market capitalization/ (Base free float market capitalization * Base Index Value)
The NIFTY Next 50 index is reviewed semi-annually based on six months of data ending January and July. The replacement of stocks in NIFTY Next 50 (if any) is implemented from the last trading day of March and September. 52 stocks have graduated from NIFTY Next 50 since 2002, with Tata Consumer Products switching places with GAIL in 2021.
