Nifty completes 25 years: The Nifty 50 index became 25 years old on 22 April 2021. It is the main index of the National Stock Exchange (NSE). The stocks included in this index change every six months. Some new shares become part of it, while some get out of it.
The Nifty started on 22 April 1996. Soon it became the most important index of the Indian stock market. During this period, three-fourths shares have been exited from the Nifty.
Only 13 stocks in 50 stocks of this index – HDFC Bank, Reliance Industries, HDFC, ITC, Hindustan Unilever, Larsen & Toubro, Tata Motors, State Bank of India, Dr. Reddy’s Labs, Tata Steel, Grasim, Hero MotoCorp and Hindalco are the only ones Has been a part of it till now.
Barring Tata Steel, Tata Motors, Grasim and Hindalco, most of these stocks have given strong dividends in two and a half decades. During this period, the Nifty 50 index has jumped 14 times in 25 years, giving an annual rate of 11.1 percent.
In 1996, the index was dominated by old sectors such as energy, auto and commodities. At that time, the share of IT industry was zero. According to the report of Motilal Oswal Financial Services, the financial sector then had a 24 per cent stake. But now the grip of private banks has strengthened.
According to the latest rating as on 31 March, the financial sector held 38.03 per cent of the index. It is followed by IT (16.77 per cent), Oil and Gas (11.78 per cent) and Consumer Goods (11.49 per cent). In 13, these four sectors have 78% dominance over the Nifty.
In the year 1996, the energy sector had a stake of 12.6 per cent, which has now reached 13.45 per cent. The share of the sector reached 40.74 per cent in March 2009, which gradually came down. Reliance Industries has the highest share of energy.
In the last 25 years, HDFC Bank has earned the highest in the list of heavyweight stocks. In 1996, it held only 0.4 per cent of the index. At that time it was the only private bank on the index. Today HDFC Bank holds a 10.24 per cent stake.
Apart from HDFC Bank, Reliance Industries (10.19 per cent), Infosys (7.98 per cent) and HDFC (7.08 per cent) together account for one-third of the index. Shares that have a higher share on the index tend to affect the index move more.
In 1996, SBI, HUL, Tata Motors, Reliance Industries and Tata Steel were the top five companies in the index. During the dominance of the energy sector in December 2005, ONGC’s share had reached 12.4 per cent on the index, which is now only 0.59 per cent.
The share of state-owned banks on the index has also been reduced from 12.2 per cent to 2.3 per cent now, while the share of metals has also gone up from 10.7 per cent to 2.86 per cent. During this period, the index of sectors such as textiles (4.9 per cent), hotels (2.2 per cent) and shipping (0.9 per cent) has been cleared.
Till June 2009, the index market was looked at as a whole to include index companies. However, the process of stock selection has changed over time and now the shares are selected only on the basis of free-float market capitalization and other parameters.
Reliance Industries (Rs 12.26 lakh crore) is the largest company in the country by market cap, but HDFAC Bank (Rs 7.87 lakh crore) has a higher share of the index due to higher free-float market cap. Non-promoter share in the free-float market cap is important.
Nifty completes 25 years