NSE Indices Comparison 31Dec2022
Let us look at the four indices of NSE (National Stock Exchange of India), namely, Nifty 50, Nifty 100, Nifty 500 and Nifty Next 50. All the data are as at the end of 31st of December 2022.
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Fundamentals
Table
1 shows the returns, risks and valuation measures of these four
indices. For example, Nifty 50 index's five-year annualised return is
12.9 per cent versus just 7.5 per cent for Nifty Next 50 index.
As returns in 2022 were subdued, the five-year returns too were pulled down. For comparison, the five-year annualised return for Nifty 50 was 17.7 percent on 31Dec2021 and it was just 12.9 percent as on 31Dec2022.
And the decrease in annualised returns for Nifty Next 50 was more dramatic for end-2022 versus end-2021. You can refer my earlier blog for the data.
The five-year standard deviation (a risk measure) for Nifty 50 is 19.4 per cent (2022) and it is the same for Nifty Next 50 index (2021).
The price-earnings (PE) ratio and price-to-book (PB) ratio for Nifty 50 index are 21.8 and 4.3 respectively. And they are 25.6 and 4.8 for the Nifty Next 50 (formerly known as Junior Nifty). Based on these measures, Nifty Next 50 is more richly valued than Nifty 50 index as on 31Dec2022 (the situation was reverse as on 31Dec2021).
This table 2 shows the share of top five and top 10 stocks in the indices. Concentration risk in Nifty 50 is much higher as compared to, say, Nifty 500. Of the four indices analysed, Nifty Next 50 has the lowest concentration risk.
The shares of top five and ten stocks in Nifty 50, 100 and 500 indices as at the end of 2022 are more or less the same as at end-2021. The same holds true for Nifty Next 50 also.
The weights of top five and top 10 stocks in Nifty Next 50 index are 17.1 and 31.8 per cent respectively, which are much lower than the values relating to other three indices--Nifty 50, Nifty 100 and Nifty 500 (table 2 below).
Reliance Industries, HDFC Bank and ICICI Bank are the dominant stocks in Nifty 50, Nifty 100 and Nifty 500. Nifty Next 50 index's top three stocks are Adani Total Gas, LTIMindtree and Pidilite Industries.
This table 3 describes the top five sectors in the indices and their weights. The top five sectors in Nifty 50 are Financial Services, Information Technology, Oil, Gas & Consumable Fuels, Fast moving consumer goods (FMCG) and Automobiles, with a total share of about 78 percent in the index.
Compared to 2021, the sector concentration has come down significantly in 2022, with IT and FMCG sectors losing their share.
Nifty 50 and Nifty Next 50 Free Float
These tables 4 and 5 give details of free float of top 10 stocks in Nifty 50 and Nifty Next 50. Free float is defined as the number of listed equity shares of a particular company that are readily available for trading on the stock exchange. Free float is nothing but number of shares held by investors other than the stake owned and controlled by promoters.
As shown in table 4, the promoters' stakes in ICICI Bank, HDFC Ltd, ITC, and Larsen & Toubro are nil and as such their free float is 100 per cent--which means all the outstanding equity shares in these firms are available for trading.
Free
float for Reliance Industries is only 49.4 per cent as the remaining shares
are held by the promoters.
Between Nifty 50 and Nifty Next 50, the top ten stocks in Nifty 50 have higher free float as compared to the top ten in Nifty Next 50. This is due to the fact that five listed companies in top ten of Nifty 50 are professionally-run companies (for all practical purposes, Axis Bank has no promoter, though Government of India holds 9.7 percent as technical promoter -- so is the case with Infosys).
Only one stock (namely, Tata Power) in top ten of Nifty Next 50 index has more than 50 percent free float.
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P.S.: After writing the blog, the following updates are added with new information / images:
Update 01Feb2023 : Due to steep fall in Adani group stocks during the last week of Jan2023, two Adani group stocks, namely, Adani Total Gas (stock with biggest weight on 31Dec22) and Ambuja Cements (stock with 4th biggest weight on 31Dec22) were out of the top ten stocks in Nifty Next 50 index as of 31Jan2023.
Nifty Next 50 facstsheet >
Nifty 50 factsheet >
References:
Nifty Indices factsheets
My Tweet 20May2021 - compare ETFs - ETF - Nippon India ETF Junior BeES
My Tweet 20May2021 - compare NSE Indices : Nifty 50, Nifty 500 and Nifty Next 50
My Tweet 22May2021 - Compare Funds - ETFs: Nippon India ETF Junior BeES
Raw data as on 31Dec2022 >
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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He blogs at:
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