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Liquidity. Over one year (October 1998 to October 1999), the trading volume on NSE for NIFTY stocks was ₹ 3.5 trillion, giving a liquidity ratio of 105%. The 'liquidity ratio' is defined as trading volume over one year divided by market capitalisation today.
Hedging effectiveness. The basic risk of NIFTY futures will be lower owing to the superior liquidity of NIFTY stocks and of NSE. NIFTY has higher correlations with typical portfolios in India as compared to any other index. These two factors imply that hedging using NIFTY futures will be superior.
Governance. NIFTY is managed by a professional team at NSE Indices. There is a three-tier governance structure comprising the board of directors of NSE Indices, the Index Policy Committee, and the Index Maintenance Subcommittee. NIFTY 50 has fully articulated and professionally implemented rules governing index revision, corporate actions, etc. These rules are carefully thought out, under Indian conditions, to dovetail with operational problems of index funds and index arbitrageurs. NIFTY 50 is relatively free of manipulation, for three reasons: (a) the index levels are calculated from a highly liquid exchange with superior surveillance procedures (b)NIFTY 50 has a large market capitalisation so the consequence (upon the index) of a given move in an individual stock price is smaller and (c)NIFTY 50 calculation intrinsically requires liquidity in proportion to market capitalisation, thus avoiding weak links which a manipulator can attack. Users of the NIFTY 50 benefit from the research that is possible owing to the long time-series available: both NIFTY 50 and NIFTY 50 Total Returns Index series are observed from July 1990 onwards.NIFTY 50 is backed by solid economic research.
Equities trading at NSE began in November 1994. By late 1995, NSE became India's largest equity market and was looking for a market index to utilise this unique information source. NSE also wanted to have a vehicle for the futures and options market. NSE approached the economists Dr. Ajay Shah and Dr. Susan Thomas, (then at Centre for Monitoring Indian Economy Pvt. Ltd.- CMIE (www.cmie.com) and now at Indira Gandhi Institute of Development Research (IGIDR - www.igidr.ac.in), to conduct research on methods in index construction. This work was funded by the USAID FIRE project (www.usaid.gov) and led to the NIFTY 50. Some of their research is visible over the Internet at www.igidr.ac.in/~ajayshah
In 1998, NSE and CRISIL launched a joint venture named NSE Indices to focus on index management. This pools the index development efforts into a coordinated whole, India's first specialised company focussed upon the index as a core product. In August 2013, CRISIL Limited, erstwhile 49% stake holder in NSE Indices sold its entire stake in NSE Indices to NSE Investments Limited (formerly known as NSE Strategic Investment Corporation Limited), a subsidiary of the National Stock Exchange India Limited and hence NSE Indices has since become wholly owned subsidiary of the NSE Investments Limited (formerly known as NSE Strategic Investment Corporation Limited). Today, the NIFTY 50 is owned and operated by NSE Indices. It is a global phenomenon where an independent company calculates and maintains the index.
No. It's purely coincidental. It was research that led to the choice of 50 stocks as the optimal size of an index in the Indian equity market. One day, a clever leap was made from NSE-50 to ' NIFTY 50'.
NIFTY50 USD is NIFTY 50, measured in dollars. If the NIFTY 50 rises by 2% it means that the Indian stock market rose by 2%, measured in rupees. If the NIFTY50 USD rises by 2%, it means that the Indian stock market rose by 2%, measured in dollars.
The NIFTY 500 is India’s broadbased index of the Indian capital market. The NIFTY 500 represents about 95% of free-float market capitalisation and about 92% of the total turnover on the NSE. The NIFTY 500 is a free-float market capitalisation weighted index. The base date for the index is the calendar year 1994 with the base index value being 1000. Companies in the index 