Best Value For Your Money from RamaKrishna Vadlamudi

Sunday, 4 October 2026

Nifty Valuation Tracker Series: September 2026 Update – Broad Market and Smart Beta Indices

Nifty Valuation Tracker Series: September 2026 Update – Broad Market and Smart Beta Indices 04Oct2026

(This is my 538th blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.

The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance.

Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

1 Introduction

Every investor wants to know whether the market is expensive or inexpensive. There is no perfect answer. However, comparing today's valuations with their own history provides a useful starting point.

This blog is the fourth part of the updated valuation framework for select NSE indices numbering six, building on earlier studies published:

1) On 21Apr2026 namely “How Valuations Shape Returns and Risk in Select NSE Indices,”

2) On 03May2026 namely “Valuation Changes in Broad Market and Smart Beta Nifty Indices," and

3) On 31May2026 namely "Nifty Valuation Tracker Series: May 2026 Update – Broad Market and Smart Beta Indices"

4) On 04Jul2026 namely "Nifty Valuation racker Series: June 2026 Update – Broad Market and Smart Beta Indices"

It is not a prediction of future market returns. It is simply a framework to understand where valuations stand today. This is not investment advice.

Note: The idea is to update this 23-quarter framework each quarter as new data become available. For example, inclusion of the Oct-Dec2026 quarter will extend the dataset to 24 quarters in the next update, maintaining a rolling historical reference.

(article continues below)

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Related blogs:

"Nifty Valuation Tracker Series: June 2026 Update – Broad Market and Smart Beta Indices" 04Jul2026

"Nifty Valuation Tracker Series: May 2026 Update – Broad Market and Smart Beta Indices" 31May2026

“Valuation Changes in Broad Market and Smart Beta Nifty Indices” 03May2026

“How Valuations Shape Returns and Risk in Select NSE Indices” 21Apr2026

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2 Why valuations matter

Valuations tell us how much investors are willing to pay for a company's earnings or assets.

A valuation below the 25th percentile suggests that an index is relatively inexpensive compared with its own history. A valuation above the 75th percentile suggests that it is relatively expensive.

PE, PB and dividend yield should be viewed together. None of them, by itself, is a sufficient basis for an investment decision.

About this study:

This is the September 2026 update of my Nifty Valuation Tracker series. The study, similar to the previous studies, focuses on current valuation positioning within a historical range.

The analysis compares current levels (as of 30Sep2026) against a 23-quarter baseline from Mar2021 to Sep2026 across six Nifty indices. It looks at returns, volatility, PE, PB and dividend yield.

It uses percentile-based positioning of PE, PB and dividend yield to assess whether valuations are relatively rich or attractive across segments.

The analysis starts from Mar2021 because the method used to calculate Nifty 50 earnings per share changed at that point. Using only the newer data makes the historical comparisons consistent.

The study covers six selected Nifty indices, three broad and three "smart beta" indices. It is not a comprehensive study of the Indian equity market.

Indices covered are:

Nifty 50,
Nifty Midcap 150,
Nifty Smallcap 250,
Nifty 100 Low Volatility 30,
Nifty 200 Momentum 30, and
Nifty 200 Quality 30.

Charts showing Summary Return / Valuation data and current valuation (Sep2026) versus historical range (23 quarter data from Mar2021 to Jun2026) of six select Nifty indices >

Click on the charts to view better >

3 Broad Market Indices:

1. Nifty 50 Index

Nifty 50 looks the least expensive among the three broad-market indices.

Its current PE of 19.4 and PB of 2.8 are both at the minimum levels seen during the 23-quarter study period. Its dividend yield of 1.22 per cent is around the 25th percentile.

This makes the valuation picture for Nifty 50 much more comfortable than that for mid- and small-cap stocks.

But valuations are also a function of the market sentiment, which rightly or wrongly perceives Nifty 50 stocks having low growth opportunities compared to their smaller counterparts in India and foreign markets.

2. Nifty Midcap 150

Midcaps look reasonably valued, although not cheap. The current PE of 28.4 is below the historical median of 30.6. PB at 3.8 is also below the median of 4.1.

Dividend yield, at 0.71 per cent, is below the 25th percentile. Thus, on this framework, Midcap 150 does not look stretched in the way Smallcap 250 does.

3. Nifty Smallcap 250

Smallcaps continue to look expensive on some important measures.

PE at 34.5 is above the 75th percentile of 33.7. Dividend yield, at 0.61 per cent, is at the lowest level of the study period.

PB at 3.4 is below the historical median of 3.6, so the signals are mixed. Nevertheless, the high PE and very low dividend yield suggest caution.

4 "Smart Beta" Indices:

4. Nifty 100 Low Volatility 30

The index looks relatively attractive on valuation.

Its PE of 23.7 is below the 25th percentile. PB of 3.6 is at the minimum level of the study period. Dividend yield, at 1.26 per cent, is also below the 25th percentile.

The index also has the lowest historical median volatility among the six indices in this study, true to its label.

5. Nifty 200 Momentum 30

Momentum has become noticeably cheaper during the quarter.

Its current PE of 23.2 is below the historical median of 24.3. PB of 4.3 is at the median. Dividend yield of 0.86 per cent, however, remains below the 25th percentile.

Momentum has historically produced strong returns, but also carries relatively high volatility.

6. Nifty 200 Quality 30

Quality presents an interesting valuation picture.

Its current PE of 25.7, PB of 7.9 and dividend yield of 1.86 per cent are all below their respective 25th percentile levels.

On this historical framework, therefore, Quality looks relatively inexpensive.

5 Cross Index Valuation, Risk and Return (Median Values Only):

The historical data show that indices with higher median one-year returns have generally also experienced higher volatility.

The median one-year return during the study period was 11.9 per cent for Nifty 50, compared with 24.5 per cent for Midcap 150 and 27.2 per cent for Smallcap 250.

Momentum also delivered a high median one-year return of 21.3 per cent.

But higher returns came with higher volatility. Median standard deviation was 13.6 per cent for Nifty 50, 17.1 per cent for Midcap 150, 18.4 per cent for Smallcap 250 and 19.2 per cent for Momentum.

True to its nature, Low Volatility 30 had the lowest median volatility at 12.0 per cent. Quality had a median return of 14.4 per cent with volatility of 13.6 per cent.

These are historical observations, not forecasts.

Chart showing cross index valuation, risk and return (only median values) >

23 Quarters data from Mar2021 to Sep2026 >

6 What Changed During the Jul-Sep2026 Quarter?

PE and PB generally declined between Jun2026 and Sep2026. Nifty 50 PE/PB fell 5.9 per cent/10.9 per cent, Midcap 150 by 2.6 per cent/19.9 per cent, while Momentum saw the sharpest fall at 12.8 per cent/15.9 per cent.

Chart showing valuation changes in six Nifty indices between end-Jun2026 and end-Sep2026 >

Click on the chart to view better >

A paradox: An interesting divergence was seen in dividend yields. For Midcap 150 and Quality 30, PE and PB fell while dividend yield rose. But for Smallcap 250, Low Volatility 30 and Momentum 30, all three declined.

This is not necessarily contradictory. At index level, PE and PB can fall when earnings or book value grow faster than market value. Dividend yield, however, depends on dividends paid over the preceding 12 months relative to market value.

It can therefore fall if dividends decline or grow more slowly. Changes in index constituents and their weights can also influence all three measures.

This apparent paradox needs a more comprehensive analysis of index composition changes and dividend payouts of index constitutents -- which is outside the scope of the current study.

7 Shortcomings

This analysis has certain limitations.

It covers only six selected Nifty indices. It does not fully represent the Indian stock market though it fairly captures large part of the market.

The analysis uses only end-quarter data. It does not capture valuation changes or market movements that occurred during the quarter.

The Jun2026 to Sep2026 comparison therefore shows the change between two quarter-end points, rather than the path followed during Jul-Sep2026.

The historical period is limited to 23 quarters because of the change in Nifty 50 earnings calculations since Mar2021.

The study focuses only on valuations. It does not consider earnings growth, interest rates, liquidity, macroeconomic conditions or investor sentiment.

8 What stands out in Sep2026?

The Sep2026 data show a meaningful divergence across Nifty indices. Nifty 50 appears relatively inexpensive compared with its recent history, while Midcap 150 looks reasonably valued.

Smallcap 250 remains expensive on PE and has an exceptionally low dividend yield.

Among the smart beta indices, Low Volatility 30 and Quality 30 look attractive on this valuation framework. Momentum has also become considerably cheaper compared with Jun2026.

Valuation should be treated as one input into investment decisions, rather than as a market-timing tool.

The Nifty Valuation Tracker will be updated again with the next quarterly data.

Check below for references and additional notes.

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Additional data:

Data note: The valuation measures come from Nifty Indices. PE, PB and dividend yield may not update at the same frequency, because each depends on different underlying data.

The author's best guess is:

PE ratios update more often, because NSE India / Nifty Indices appear to refresh EPS as companies declare quarterly and annual results.

In contrast, PB ratios update less often, because book value is reported half-yearly and yearly, not every quarter for all listed companies in India. It's possible NSE India may be updating book values based on published fiscal year (annual reports) data.

Dividend yield updates with price daily and with the declared dividend when companies announce it, so its rhythm differs again.

Index rebalancing frequency is as follows:

It is semi annual (March and September) for:

Nifty 50,
Nifty Midcap 150, and
Nifty Smallcap 250,

For, Nifty 100 Low Volatility 30, it is quarterly (March, June, September, December).

For Nifty 200 Momentum 30 index, it is semi annual (June, December).

For Nifty 200 Quality 30 too, it's semi annual (June, December).

Notes on index weighting:

Nifty 100 Low Volatility 30 index's 'score' weighting is based on inverse of stock's volatility (standard deviation).

Nifty 200 Momentum 30 index's 'tilt' weighting is calculated as stock free float market cap multiplied by its momentum score.

Nifty 200 Quality 30 index's 'tilt' weighting is computed as stock free float market cap multiplied by its quality score.

Chart showing Index Characteristics of six Nifty indices >

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References:

Tweet 22Apr2025 Bizarre spike in valuation ratios (PE, PB and dividend yield) of Nifty 200 Momentum 30 index on 31Dec2024 vs previous day)

Tweet 03Jun2021 - Nifty 50 PE calculation method change wef 31Mar2021

Tweet 01May2024 - Don't compare Nifty PE ratios on or after 31Mar2021 with those in prior periods

Tweet 07Jul2024 - NSE press release on change in Nifty 50 PE calculation method (NSE press release dated 23Feb2021 -- EPS used in PE calcualtion was based on standalone finanacials; from Mar2021, it is based on consolidated basis)

Screenshot of the above >

Nifty Return Profile

Nifty Indices factsheets

Nifty 50
Nifty Midcap 150
Nifty Smallcap 250
Nifty 100 Low Volatility 30
Nifty 200 Momentum 30
Nifty 200 Quality 30

NSE Index Dashboard monthly - PDF for Sep2026

NSE Live Analysis - NSE Index performance daily - showing index values and valuation ratios of all Nifty Indices / NSE Indices on a daily basis

NSE Historical Index yield - Find out daily valuation ratios (PB, PE and dividend yield) of all Nifty indices / NSE indices (dropdown menu)

NSE Market Watch - all indices

Nifty Indices Index Methodology - Jun2026 PDF for equity indices

Excel file: NSE Indices Valuation 30Jun26

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Read more on passive equity funds and factor investing:

Top 10 Equity Indices Powering Passive Investing in India: Big-Picture View 29Jan2026 (Big picture view of Passive Equity Funds - passive funds)

The Next Generation of Market Leaders: A Fresh Look at Nifty Next 50's Corporate Landscape 15Jan2026 (NSE Indices / Nifty Indices)

NSE's Backtesting Claims Child Indices Beat Parent Indices - But Does It Hold in Real World? 09Dec2025 (incl calendar year returns of Nifty 50, Nifty Midcap 150 and the so-called smart beta indices) (NSE Indices / Nifty Indices)

Factor Investing in India: Do "Smart Beta" Indices Outsmart Nifty 50 and Midcap 150? 24Nov2025 (incl trailing returns; calendar year returns of Nifty 50, Nifty Midcap 150 and the so-called smart beta indices) (NSE Indices / Nifty Indices)

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Thursday, 1 October 2026

Nifty High Dividend Yield 15 Index: A Dividend Basket Dominated by PSUs 01Oct2026

Nifty High Dividend Yield 15 Index: A Dividend Basket Dominated by PSUs 01Oct2026

Follow @vrk100

(This is my 537th blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.

Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

The article is about Nifty High Dividend Yield Index, introduced by NSE Indices Ltd, a subsidiary of India's premier exchange, NSE India on 30Sep2026.

NSE lists the index as a Strategy index.

The newly-launched and dividend-focused index tracks 15 companies from the Nifty Total Market selected using dividend yield scores.

How the Index Works

The index uses trailing 12-month dividends relative to market capitalisation to determine dividend yield scores. Weights combine the dividend yield score with free-float market capitalisation, with each stock capped at 10 per cent.

The index will be rebalanced twice a year, in June and December.

Chart 1 showing Stock-wise List and Weights >

A Strong PSU Presence

The index has a notable PSU presence. Seven of its 15 constituents are PSUs (public sector undertakings, including one public sector bank), accounting for 63.7 per cent of the index.

The largest holdings include BPCL, TCS, Indian Oil, ONGC and Coal India, with several constituents close to the 10 per cent individual-stock cap.

The top five stocks account for more than 50 per cent of the index, while the top ten account for 90 per cent. Thus, despite having 15 constituents, the index is substantially concentrated in a relatively small number of companies and sectors.

Potential investors need to consider this high concentration risk before making any investments.

A Quirky Inclusion

JSW Dulux is an interesting and quirky example of the limitations of a purely mechanical dividend strategy. The company entered the index with a substantial recent dividend history inherited from its earlier avatar as Akzo Nobel India, including a Rs 156 special dividend in Aug2025.

But following the change in control to JSW group, its future dividend policy could be different. Since the Nifty High Dividend Yield 15 uses trailing 12-month dividends rather than forecasts of future payouts, the stock can qualify today even if its high dividend yield proves temporary.

If dividends moderate, the stock's trailing yield—and consequently its place in the index—could change at a future review.

Heavy Sector Concentration

The concentration is even clearer at the sector level. oil & gas sector accounts for 44.3 per cent, information technology (IT) for 26.9 per cent and financial services for 15.3 per cent. Together, these three sectors make up 86.5 per cent of the index.

It may be noted that the oil & gas sector is particularly sensitive to geopolitical developments and global energy prices, as illustrated by the adverse impact of the recent Iran war on the Indian economy.

Chart 2 showing Sector wise concentration >

What It Means for Investors

Concentration risk: For investors, the key point is that high dividend yield does not eliminate equity risk. The new index provides a systematic dividend-focused basket, but its substantial PSU, sector and company concentration is an important feature to understand alongside its dividend focus.

In short, any passive exposure to such indices with high concentration risk may not be suitable for most investors. As the index was introduced only yesterday, the chances of any passive funds being launched in the next few months based on the index are slim.

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References:

Press release on index introduction

Nifty Indices Research Papers

Nifty Indices methodology document PDF

Nifty Indices factsheets

Nifty High Dividend Yield 15 Index

Nifty High Dividend Yield 15 factsheet PDF

NSE Index Dashboard - Sep2026 PDF

Inside the Nifty 500 Index: How It Changed from 2021 to 2026 28Jul2026

Additional data:

Screenshot of Nifty High Dividend Yield 15 Index factsheet PDF for Sep2026 >

Thursday, 17 September 2026

Is the Midcap-Smallcap Rally Really Broad-Based? 13Sep2026

Is the Midcap-Smallcap Rally Really Broad-Based? 13Sep2026

Follow @vrk100

(This is my 536th blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.

Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

The Nifty MidSmallcap 400 Index, a representative index of India's mid- and small-cap stocks, has risen 14.2 per cent over the past six months. But how much of that gain is actually being shared across its 400 constituents?

This is an attempt to look beneath the index and develop a simple, repeatable way to track whether participation is broadening or narrowing over time.

1) Why Look Beneath the Index?

As of yesterday, the Nifty MidSmallcap 400 delivered 14.2 per cent over the past six months, beating substantially the large-cap oriented Nifty 50 index. But an index can sometimes give a misleading picture of what is happening to the average stock.

I wanted a simple way to answer a basic question: is the market moving broadly, or is the index being lifted by a relatively small group of stocks?

Rather than trying to construct an equal-weight index, I decided to track a few simple measures of market breadth and dispersion over time.

(article continues below)

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Related blogs:

Nifty Indices Broad Market and Sector Review – August 2026 06Sep2026

Tweet thread 31Jul2025 on Nifty Internals (relative riskiness of three Nifty Indices)

Tweet thread 03Mar2025 Nifty Indices Internals

Tweet thread 03Jan2025 on Nifty Internals

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2) The Average Stock Has Done Less Well Than the Index

The six-month return of the MidSmallcap 400 index is 14.2 per cent. The median return, over the past six months, of its 400 constituents is just 9.6 per cent.

In other words, the index has done 4.6 percentage points better than the typical stock.

(Note: The index itself is also relatively diversified: only eight stocks have a weight of more than 1 per cent, while the top 10 stocks together account for just 12.1 per cent, as of 31Aug2026. So, the gap between the index and median stock is less likely to be explained simply by a handful of very large constituents.)

This does not necessarily mean that the market is narrowly driven. But it tells us that the index's 14.2 per cent return is not representative of the experience of the median constituent.

Six months vs one year:

The median stock is up 9.6 per cent over six months versus down 8.3 per cent over one year, pointing to a recent recovery.

The index–median gap is 10.9 percentage points over one year, compared with 4.6 percentage points over six months, indicating some improvement in the median stock performance in the past six months period.

Chart showing Nifty MidSmallcap 400 Index versus Median Stock Return >

3) How Many Stocks Are Actually Going Up?

A more intuitive measure is positive breadth: what percentage of the 400 stocks have delivered a positive return over six months?

As of 16Sep2026, 259 stocks, or 64.8 per cent, were in positive territory. The remaining 141 stocks, or 35.2 per cent, had negative returns.

So nearly two-thirds of the stocks have risen over the past six months. That suggests that the market's advance is reaching a reasonably broad part of the universe, rather than being confined to a handful of stocks.

The 64.8 per cent reading is our starting point. The more useful question is how this number changes over time.

A rise in this number, in future, would indicate that participation is broadening, while a decline would indicate that participation is narrowing. Tracking the measure over time should make these changes easier to identify.

4) Percentage beating the index

How Many Stocks Have Actually Outperformed the Index?

Over the past six months, 172 of the 400 stocks or 43 per cent have outperformed the index, which has returned 14.2 per cent.

5) The Winners and Losers Are Far Apart

There is another interesting feature of the market: the wide gap between winners and losers.

Chart showing Nifty MidSmallcap 400 Index Return Distribution over the past six months >

The top 10 per cent of stocks had six-month returns of 48.4 per cent or more, while the bottom 10 per cent had returns of -11.6 per cent or less. That is a 60 [(48.4) - (-11.4)] percentage-point gap between the two ends of the market.

This gap is a simple measure of dispersion: how differently stocks are behaving from one another. If it narrows over time, stocks are performing more similarly; if it widens, the divergence between winners and losers is increasing.

For now, the 60-point gap (90th–10th percentile gap) tells us that, despite reasonably broad participation, there is considerable divergence beneath the index.

The 90th–10th percentile spread is a broad indicator of how differently the stocks are performing in an index.

6) What to Track Going Forward

For the Nifty MidSmallcap 400, analysing the following four measures using six-month returns (updated monthly or quarterly) will be a simple and useful framework to assess whether the participation is broadening or narrowing.

A) Index versus median return: currently a 4.6 percentage-point gap (index return higher than the median stock return) exists based on the past six months return.

B) Positive breadth: currently 64.8 per cent of stocks have positive six-month returns.

C) Percentage beating the index: Check how many stocks are outperforming the 14.2 per cent index return. At present, 43 per cent of the stocks have outperformed the index over the past six months.

D) 90th–10th percentile gap: as per the latest data, 60 percentage points, measuring the spread between winners and losers.

Together, these capture how representative the index is, how widespread the gains are, and how widely stock performance is diverging. The aim is to build a history over the next one or two years and see how these measures change over time.

7) Summary of our current study

As of 16Sep2026, the picture is mixed. The Nifty MidSmallcap 400 is up 14.2 per cent over six months, with 64.8 per cent of its stocks in positive territory, suggesting reasonably broad participation.

But the index is 4.6 percentage points ahead of the median stock, while the 90th–10th percentile gap is 60 percentage points, pointing to considerable divergence beneath the surface.

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References:

Nifty Indices Nifty MidSmallcap 400 index

Nifty MidSmallcap 400 - factsheet PDF Aug2026

Nifty Indices Research Papers

Nifty Indices methodology document PDF

Additional data:

1) Passive funds tracking the Nifty MidSmallcap 400 Index >

As of now, there is only one passive fund tracking the index, namely,

Navi Nifty MidSmallcap 400 Index Fund - its top stocks as of 31Aug2026 >

2) Nifty 100 Index is basically, a large cap index. Suppose you want to check whether the market breadth or participation of the stocks in the index is wide or narrow, you can check the returns of the Nifty 100 index versus Nifty 100 Equal Weight index.

Over a one-year period, the Nifty 100 is down 5.3 per cent, while the Nifty 100 Equal Weight index is up 0.8 per cent, suggesting that the weakness in the large-cap index has been concentrated in some of its larger constituents by weight.

This divergent performance indicates that participation across the 100 constituents has been considerably better than the headline, market cap-weighted index suggests.

3) Nifty MidSmallcap 400 index factsheet for Aug2026 >

4) Nifty internals (relative riskiness of Nifty Indices) >

Tweet thread 01Apr2026 >

Graph showing Nifty internals of Nifty 50, Nifty Next 50 and Nifty MidSmallcap 400 indices > data as of 31Mar2026 >

Sunday, 13 September 2026

Nifty 500 Growth 50: A Beginner’s Guide to the Newly Launched Index 13Sep2026

Nifty 500 Growth 50: A Beginner’s Guide to the Newly Launched Index 13Sep2026

Follow @vrk100

(This is my 535th blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.

Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)

The article is about Nifty 500 Growth 50 Index, introduced by India's premier exchange, NSE India on 26Aug2026. NSE lists the index as a Strategy index.

1) Introduction and Importance

The Nifty 500 Growth 50 is a new index from NSE Indices Ltd that tracks 50 companies from the Nifty 500 Index showing strong growth. It considers their profit growth, sales growth and stock return performance while selecting companies.

The index gives investors a simple way to follow a basket of growth-focused companies and could also become the basis for products such as exchange traded funds or ETFs and index funds.

(article continues below)

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Related blogs:

Nifty Indices Broad Market and Sector Review – August 2026 06Sep2026

Nifty Smart Beta Indices Review - August 2026 06Sep2026

Nifty Indices Broad Market and Sector Review – July 2026 02Aug2026

Inside the Nifty 500 Index: How It Changed from 2021 to 2026 28Jul2026

Nifty 500 Snapshot 30Jun2026

A Simple Guide to the Nifty India FPI 150 Index 04May2026

BSE 500 Versus Nifty 500: Same Market, Different Indices 02Jan2026 (NSE Indices / Nifty Indices) (BSE Indices)

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2) How exactly NSE selects these 50 growth stocks?

So how did NSE arrive at these 50 companies?

All the 50 stocks are drawn from the broader Nifty 500 Index.

NSE looked at three measures for every eligible stock:

> three-year profit growth,

> three-year sales growth, and

> one-year risk-adjusted stock performance

And, NSE then combined them into an overall growth score. The companies with the strongest scores made the cut, subject to rules on liquidity, stock and sector weights.

For investors, the index can therefore be a useful starting point to discover interesting companies and sectors, rather than a portfolio to blindly copy — especially since its concentrated nature can make it relatively risky for novice investors.

3) Index's Portfolio Characteristics

Methodology: Tilt weighted

Tilt weighted means the weights are influenced not just by a company’s size but also by its growth score. Companies with stronger growth scores can receive a higher weight, while stock and sector caps prevent any one company or sector from becoming too dominant.

Each stock’s weight is derived by multiplying its free-float market capitalisation by its growth score. It then applies a 5 per cent stock cap and a 30 per cent sector cap.

No. of Stocks: 50

Index launch Date: 26Aug2026

Index base Date: 01Apr2005

Base Value: 1000

Calculation Frequency: End of day

Index Rebalancing: Half yearly (June, December)

At present, there are no passive funds such as exchange traded funds (ETFs) or index funds tracking this index.

4) Fundamentals, risk and return ratios

All the data are as of 31Aug2026.

PE ratio: 42.9

PB ratio: 8.8

Dividend yield: 0.23

Total returns (these are theoretical / back tested returns, readers should not interpret them as an indication of future performance):

YTD: 10.7%

1-year: 17.1%

5-year: 17.5

Standard deviation:

1-year: 20.6%

5-year: 20.1%

5) How does it compare with its parent index Nifty 500?

The Nifty 500 Growth 50 is quite different from its broader parent, the Nifty 500.

While financial services dominates both, the Nifty 500 Growth 50 has a much higher allocation to capital goods at 28.9 per cent.

Its top holdings are also different, with growth-oriented names such as Dixon Technologies, MCX, Nykaa and Trent featuring prominently.

The Growth 50 trades at a much higher PE of 42.9 versus 22.7 for the Nifty 500, and a PB of 8.8 versus 3.3.

The child index's dividend yield is also much lower at 0.23 per cent, compared with 0.95 per cent for the parent index.

This suggests investors are paying a significant premium for the growth potential of its companies in the Growth 50 Index.

For investors, the Growth 50 Index is therefore more concentrated and growth-focused, with potentially higher returns but also higher valuation and concentration risks.

The higher valuation for Growth 50 indicates that a significant part of the expected growth may have already been priced into these stocks. In my view, this leaves less room for error should future growth falls short of market expectations.

Even volatility, as represented by standard deviation, for the Nifty 500 Growth 50 is much higher versus the parent index, indicating the riskier nature of the index.

6) Sector Allocation and Top Stocks:

Capital goods, financial services and consumer services stocks dominate the index.

Chart showing top 10 sectors and top 10 stocks in the index >

Sectors:

The biggest thing to note is the index’s sector concentration: Capital Goods and Financial Services together make up 56.6 per cent, while the top five sectors account for 81.2 per cent.

This makes the index more sensitive to developments in a few key parts of the economy than the broader Nifty 500.

For small investors, this concentration can increase risk if sectors such as Capital Goods or Financial Services face a prolonged slowdown.

However, the concentration is also a result of the index’s focus on companies with stronger growth characteristics.

Stocks:

The top 10 stocks also show how strongly the index leans towards growth-oriented companies, rather than simply the largest companies in the market.

Dixon Technologies has the highest weight at 6.1 per cent, followed by MCX at 5.7 per cent and FSN E-Commerce (Nykaa) at 5.5 per cent.

Jio Financial Services, Cummins India and GE Vernova T&D India are the other stocks with weights above 4 per cent.

The top 10 stocks account for 47.5 per cent of the index, highlighting concentration risk.

The full list of 50 stocks is provided at the end of the article.

7) Action button

The Nifty 500 Growth 50 is an interesting new lens through which to look at Indian equities. Its methodology brings together companies showing strong profit and sales growth, but the resulting portfolio is concentrated and commands a significant valuation premium over the Nifty 500.

For individual investors, its biggest value may therefore be as a starting point for research — a way to discover companies and sectors that merit a closer look, rather than a ready-made list of stocks to buy.

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References:

Press release on index introduction

Nifty Indices Research Papers

Nifty Indices methodology document PDF

Nifty Indices factsheets

Nifty 500 Growth 50 Index

Nifty 500 Growth 50 factsheet PDF

NSE Index Dashboard - Aug2026 PDF

Inside the Nifty 500 Index: How It Changed from 2021 to 2026 28Jul2026

Additional data:

1) Screenshot of Nifty 500 Growth 50 Index factsheet PDF for Aug2026 >

2) Sector wise list of all the 50 stocks in Nifty 500 Growth 50 Index >

3) Interestingly, on 11Sep2026, NSE Indices Ltd another index, named, Nifty AI Catalysts Index:

It's amazing Nifty Indices could find so many stocks that are alleged to power AI (artificial intelligence) sector in India! 😂😍

press release

Index factsheet

Industry wise / sector wise list of 48 stocks that form part of the index as of 11Sep2026 >