NSE Indices Comparison 31Dec2024
(This
is for information purposes only. This should not be construed as a
recommendation or investment advice even though the author is a CFA Charterholder. 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.)
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 2024.
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Related blogs on Indian Stock Indices:
Please check below (after the end of the article)
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1. Fundamentals
Table
1 shows the returns, risks and valuation measures of these four
indices.
Please click on the image to view better >
As
shown in table 1 above, Nifty 50 index's five-year annualised return is much lower at
15.5 per cent versus 20.1 per cent for Nifty Next 50 index; even on
a one-year basis Nifty Next 50 (formerly known as Nifty Junior) has
done far better than Nifty 50.
As
small- and mid-cap stocks have done exceedingly well in calendar year
2023 and 2024, Nifty Next 50 and Nifty 500 indices have outperformed the Nifty
50, which consists of large-cap stocks.
Stocks in Nifty Next 50, like, Zomato, Vedanta, Info Edge (India), InterGlobe Aviation, Hindustan Aeronautics, Divi's Laboratories and Siemens have contributed spectacular returns of between 35 and 80 per cent in calendar year 2025--this has resulted in Nifty Next 50 outperforming Nifty 50 by a big margin in 2025.
The
one-year standard deviations (a risk measure indicating volatility of
an index or a stock) for these Nifty indices analysed here are much
lower compared to the historical standard deviations -- this could be
due to the fact between April2023 and Sep2024, Indian stocks have
provided spectacular returns with lower volatility.
As
can be seen from the wide difference between since-inception standard
deviation and 5-year standard deviation, Indian stocks have been
experiencing considerably lower volatility in the past eight to nine years (except during the COVD-19 Pandemic outbreak year 2020).
As
indicated by the price-earnings or P/E ratio, the Nifty indices are
richly valued compared to history as well as compared to other emerging
markets.
Among
these indices, Nifty Next 50 is more richly valued than Nifty 50 --
maybe, indicating investors' expectations of superior performance from Nifty
Next 50 stocks.
2. Top 10 Stocks
Table 2 shows the share of top five and top 10 stocks in the indices.
Please click on the image for a better view >
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 and Nifty 500 have the lowest
concentration risk.
Reliance Industries used to be number one stock in Nifty 50, but it is now relegated to third position in the index, after HDFC Bank and ICICI Bank. Comparatively, it was in second rank at the end of Dec2023 and in first rank at end-Dec2022.
As
compared to 2023, the top 10 components in Nifty Next 50 have changed
almost completely in 2024 -- with the index retaining only one stock
(Hindustan Aeronautics) in the top 10 as at the end of 2024.
In Sep2024, Trent and Bharat Electronics moved to Nifty 50 from Nifty Next 50. Stocks, like, Zomato, InterGlobe Aviation, Varun Beverages and Vedanta have climbed up the ladder in 2024. But many prominent stocks have lost their pedestal position in Nifty Next 50 index during
2024. The big churn in Nifty Next 50 seems to be common every year.
3. Top 10 Sectors
Please click on the image for a better view >
These
NSE indices continue to be heavily dominated by sectors such as,
financial services, information technology, consumer services, oil & gas, fast moving
consumer goods (FMCG), power and automobile -- as indicated by their dominance
with almost two-thirds of weight in the indices.
Compared
to Nifty 50 and Nifty 100, Nifty Next 50 bears lower sector concentration risk.
Compared to end-Dec2023, the sector concentration risk is
higher as at the end of 2024 for Nifty Next 50, as Zomato (with 7.9% stake in the Nifty Next 50) and Jio Financial Services (4.0%) have dominating presence in the index.
However, the sector concentration risk for Nifty 50, Nifty 100 and Nifty 500 indices is lower as at the end of Dec2024 compared to end-Dec2023 figures.
For comparison purposes, see blog dated 24Jan2022, blog dated 12Jan2023 and blog dated 27Jan2024.
To Sum Up
This is an analysis of the broad and narrow indices of NSE -- so that one can compare
them and make their own investment decisions. This is not a
recommendation, this is meant for educational purpose only -- so that
novice investors can better appreciate the underlying dynamics of the
indices in particular and stock market in general.
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How to Buy Nifty Midcap 150 Index 03May2024
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Understanding Real Sensex and Currency Debasement 14Mar2024
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Disclosure: I've got a vested interest 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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