Nifty 500

What is NIFTY 500?

NIFTY 500 is India’s first broad-based index on the National Stock Exchange (NSE). It is a diversified index of 500 stocks based on full market capitalization and average daily turnover out of ~1300 companies listed on NSE. These stocks span 21 sectors of the economy, with over 29% representation given to Financial Services, followed by IT, Oil, Gas & Consumable Fuels, FMCG, and Automobile and Auto components. These top 5 sectors together hold a combined weightage of 67%.

The NIFTY 500 index represents close to 96.1% of float-adjusted market capitalization on NSE. In the last six months, the traded value of all NIFTY 500’s constituents has approximated 96.5% of the total traded value of all stocks on NSE.

This NIFTY 500 index was launched with the base date as January 1, 1995, and the base value at 1000. The NIFTY 500 share price since inception, has breached the levels of 13000 at 20.05 P/E multiples. It is reconstituted on a semi-annual basis. 

The NIFTY 500 index is owned and managed by NSE Indices Limited, previously known as India Index Services & Products Limited.

NIFTY 500 stocks are disaggregated into 72 industry indices reflecting similar index weights as in market weights. NIFTY 500 has two index variants, namely the NIFTY 500 Total Returns Index and NIFTY 500 Industry Indices. This index is ideal for launching index funds, ETFs, structured products and benchmarking of fund portfolios.

Nifty 500 Stocks Selection Criteria

The NIFTY 500 share price is calculated by weighting501 stocks on the basis of free-float market capitalization relative to a particular base market capitalization value on a real-time basis.

In order to be considered for inclusion in NIFTY 500, the companies must form part of the ‘Eligible Universe’- the criteria for which have been stated as follows:

1. It should be listed on the National Stock Exchange.
2. Should rank within the top 800 on the basis of both average daily turnover and average daily full market capitalization based on the previous six months’ data.
3. Should have traded for at least 90% of days during the previous six months period.
4. A stock ranked among the top 350 based on full market capitalization will be included.
5. If the full market capitalization of a stock is 1.50 times the last constituent in the NIFTY 500 index, then it will be included.
6. On rank falling below 800 based on full market capitalization, the said stock will be excluded.
7. A newly listed security’s eligibility is verified based on the data for three months instead of six months.
8. Equity securities with Differential Voting Rights (DVR) can be included.
9. The average impact cost should not be greater than 1% during the previous six months.

Preferred stock, convertible stock, rights, warrants, and bonds that provide a guaranteed fixed return, stocks under suspension, and stocks categorized under the BZ series are ineligible for inclusion in the NIFTY 500 index.

How is NIFTY 500 Calculated

The index value is calculated as follows –

Index value = Current market capitalization/ (Base market capitalization * Base Index Value)

The NIFTY 500 index is reviewed semi-annually based on six months of data in the months of January and July each year. The replacement of stocks (if any), subject to a maximum of 25 in a given year, is implemented from the last trading day of March and September.