NSE Emerging Indices Comparison 30Jun2025
(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.)
(See bonus charts totaling three, comparing Nifty 50 and Nifty Next 50 and a snapshot on growing financial sector in India at the end of the blog)
This is an update of earlier blog
named 'NSE Emerging Indices Comparison 31Mar2024' dated 30Apr2024.
Please see this blog to know more about how these indices are
constructed. You could also see subsequent blog with data as of 30Sep2024.
Today's
blog takes a comprehensive overview of NSE's emerging indices, namely, Nifty Next 50, Nifty
Midcap 150 and Nifty Smallcap 250; and how they are doing in comparison to Nifty 500.
The latest data are as of 30th of June, 2025.
NSE or National Stock Exchange of India Limited is a premier stock exchange in India, closely followed by BSE Limited.
2. NSE Emerging Indices Comparison
Nifty Indices Limited is the index provider for NSE.
3. Fundamentals
Table
1 below presents the returns, risks and valuation measures of four
indices, namely, Nifty 500, Nifty Next 50, Nifty Midcap 150 and Nifty Smallcap 250 (all data as of 30Jun2025) >
On a year-to-date basis, Nifty 500 has provided better returns compared to other three indices, namely, Nifty Next 50, Nifty Midcap 150 and Nifty Smallcap 250.
If you compare one-year returns, Nifty Midcap 150 and Nifty 500 have done better than the other two indices. On a five-year basis, the total return of Nifty Smallcap 250 is the highest at 35.4 per cent annualised return and the lowest being Nifty Next 50 with 22.8 per cent.
On a one-year and five-year basis, Nifty Smallcap 250 and Nifty Next 50 are the most volatile; whereas Nifty 500 undergoes the least volatility (as indicated by standard deviation) among the four.
When you observe the valuation ratios, namely, PE ratio, PB ratio and dividend yield, Nifty Midcap 150 is the most overvalued index and Nifty Next 50 the least richly valued.
Compared to the peak valuations of 30Sep2024, these four indices are less richly valued now.
4. Top 15 Stocks
Of the four indices, Nifty 500 and Nifty Next 50 are having higher concentration risk compared to the two other indices, though between Nifty 500 and Nifty Next 50, Nifty 500 is more concentrated in a few names.
When analysing concentration risk, you need to bear in mind the number of stocks in an index. For example, Nifty Smallcap 250 as the name suggests has 250 stocks and as such the index's share of top 10 stocks will be lower compared to say, that of an index with 50 stocks like Nifty Next 50.
Nifty 500 is dominated by: HDFC Bank, ICICI Bank, Reliance Industries, Infosys and Bharti Airtel. Nifty Next 50 is led by: InterGlobe Aviation, Hindustan Aeronautics, Divi’s Labs, Vedanta and Britannia Industries.
5. Top 10 Sectors
Interestingly, financial services is the top sector in all the four indices.
The top three sectors in Nifty Midcap 150 and Nifty Smallcap 250 are the same and they are:
1. financial services
2. capital goods
3. healthcare
1. financial services
2. capital goods
3. healthcare
The Midcap index (top 3 sectors at 49.6 per cent and top 5 at 62.7 per cent) is more top-heavy, meaning a larger proportion of its value is concentrated in fewer stocks.
The Nifty Next 50 index (top 3 sectors at 40 per cent and top 5 at 56.8 per cent) is more diversified across constituents, with a lower concentration in top stocks, but comes with higher volatility and greater drawdowns.
The Nifty Next 50 index (top 3 sectors at 40 per cent and top 5 at 56.8 per cent) is more diversified across constituents, with a lower concentration in top stocks, but comes with higher volatility and greater drawdowns.
Nifty 500 is dominated by financial services, with almost one-third of the total exposure. The weights of top two and three sectors in Nifty 500, namely, information technology and oil & gas are much lower at 8.6 and 7.9 per cent respectively.
Midcap and Smallcap indices have more exposure to healthcare and capital goods sectors; whereas their exposure in Nifty 500 and Nifty Next 50 is much lower.
(please click on the images to view better)
6. Summary
If you compare the data as of 31Mar2024 and data 30Sep2024 with the current data as on 30Jun2025, these four indices have become less expensive now when you
compare them on the metrics of P/E ratio, P/B ratio and dividend yield.
The returns from these indices vary over time due to a combination of market structure, different risk exposures of the underlying stocks, macroeconomic factors, valuation levels, earnings momentum and investor fancy for particular market segments.
Small and mid-cap indices tend to outperform in bull markets due to growth potential. Large-cap indices are more resilient in downturns, often favoured for stability.
The premium valuations of Midcap and Smallcap indices indicate that investors are betting on higher growth for mid- and small-cap stocks versus their large-cap counterparts.
Nifty 500 being a broader index is offering stable returns, compared to more volatile indices, like, Nifty Next 50, Nifty Midcap 150 and Nifty Smallcap 250.
Midcap and smallcap indices are more exposed to cyclical sectors like industrials, capital goods, auto components, power and real estate making them more sensitive to economic conditions.
Midcap and Smallcap indices are richly valued and more volatile — suitable for long-term and risk-tolerant investors only.
If there's economic stress, small caps underperform due to fragile balance sheets. In contrast, in periods of broad economic recovery (like 2022-2024), small and mid-caps surged.
If you have a positive view on healthcare and capital goods sector, you can consider indices like, Nifty Midcap 150 and Nifty Smallcap 250 that have higher exposure to these two sectors. It is your individual choice.
In case you like financial services sector, you could opt for Nifty 500 that has almost one-third of total exposure to this sector.
Each index has a unique risk-return profile, so it's important to align your investment strategy (for example, growth, income, stability) with the right index or combination. Happy investing!
- - -
-------------------
Bonus charts: (earlier blog was NSE Indices Comparison 31Dec2024): Three charts numbered 6, 7 and 8 are given below:
Comparison between India's two top large-cap indices, Nifty 50 and Nifty Next 50 as on 30Jun2025 >
Changes in ranking: In the Oct-Dec2024 quarter, Reliance Industries (RIL) was dethroned from its second position in the Nifty 50 index, now ranking third. RIL's weighting in Nifty 50 index in Sep2024 was 8.6 per cent, which has slightly increased to 8.8 per cent now, yet its ranking slipped to third (see table 7 below).
The top two stocks in the Nifty 50 index are HDFC Bank and ICICI Bank now.
Interestingly, in Jul2023, Reliance Industries lost its position at the top, slipping to second rank after HDFC Bank overtook it. HDFC Bank's top rank was a result of the amalgamation of HDFC Ltd into HDFC Bank Ltd in Jul2023, which catapulted HDFC Bank into the number one spot in the Nifty 50 index. Since then, HDFC Bank has managed to maintain its dominance, solidifying its position at the top.
The top two stocks in the Nifty 50 index are HDFC Bank and ICICI Bank now.
Interestingly, in Jul2023, Reliance Industries lost its position at the top, slipping to second rank after HDFC Bank overtook it. HDFC Bank's top rank was a result of the amalgamation of HDFC Ltd into HDFC Bank Ltd in Jul2023, which catapulted HDFC Bank into the number one spot in the Nifty 50 index. Since then, HDFC Bank has managed to maintain its dominance, solidifying its position at the top.
Dominance of financial services sector in Nifty 50 Index:
The Financial Services sector in India is steadily expanding (refer table 8 below). Its share in the Nifty 50 index is now more one-third of the total, 37.4 per cent to be exact as at the end of 30Jun2025.
Its share rose from 32.5 per cent in Feb2024 to 37.4 per cent in Jun2025. It is worth noting that its share had previously peaked at 37.7 per cent in Dec2022 before declining to 32.5 per cent in Feb2024.
It now encompasses not only traditional banks (both private and public sector) and non-banking financial companies (NBFCs), but also a diverse range of other entities.
These include:
asset management companies (AMCs),
life and general insurance companies,
holding companies,
small finance banks,
capital market-related stocks,
FinTech firms,
and more.
These include:
asset management companies (AMCs),
life and general insurance companies,
holding companies,
small finance banks,
capital market-related stocks,
FinTech firms,
and more.
What is the secret sauce of the sector's increasing pie?
The Financial Services sector in India is undergoing significant expansion, reflecting broader economic growth and modernisation.
The sector’s expansion signifies a wider reach in terms of financial inclusion and growth of payment and lending services offered by innovative FinTech companies. For example, the rise of mobile wallets like PhonePe and Paytm has allowed millions of people to access digital payments, savings and loans for the first time. Payment initiatives, like, UPI have made financial access easier for millions.
The expansion reflects the diversification of financial products and services available to consumers. The diversified services include:
- Wealth management services through AMCs and portfolio management firms
- Life and general insurance policies with greater reach
- Innovative FinTech solutions like peer-to-peer lending, crowd-sourced funding and digital insurance
This gives both consumers and businesses more choice in terms of financial solutions tailored to their needs. Startup firms, like, Zerodha and Groww have expanded the landscape of financial services in India.
The financial sector growth signifies the unprecedented growth in number of demat accounts, especially in the past five years, leading to burgeoning growth of capital market related companies. Accessing money from capital markets is made easier for corporates and even for mid-tier firms.
As the sector continues to evolve, it will continue to play a central role in our economic growth.
The Financial Services sector in India is undergoing significant expansion, reflecting broader economic growth and modernisation.
The sector’s expansion signifies a wider reach in terms of financial inclusion and growth of payment and lending services offered by innovative FinTech companies. For example, the rise of mobile wallets like PhonePe and Paytm has allowed millions of people to access digital payments, savings and loans for the first time. Payment initiatives, like, UPI have made financial access easier for millions.
The expansion reflects the diversification of financial products and services available to consumers. The diversified services include:
- Wealth management services through AMCs and portfolio management firms
- Life and general insurance policies with greater reach
- Innovative FinTech solutions like peer-to-peer lending, crowd-sourced funding and digital insurance
This gives both consumers and businesses more choice in terms of financial solutions tailored to their needs. Startup firms, like, Zerodha and Groww have expanded the landscape of financial services in India.
The financial sector growth signifies the unprecedented growth in number of demat accounts, especially in the past five years, leading to burgeoning growth of capital market related companies. Accessing money from capital markets is made easier for corporates and even for mid-tier firms.
As the sector continues to evolve, it will continue to play a central role in our economic growth.
Table 6: NSE Indices Fundamentals
Table 7: NSE Indices Top 15 Stocks
Table 8: NSE Indices Top 10 Sectors
The data are self-explicit. Readers can draw their own conclusions in terms of risk-return calculus, except comments mentioned above.
-------------------
References and additional data:
Nifty Passive Insights Mar2025 PDF
NSE Index Methodology Document Jun2025 PDF
Check Rupee Vest MF portfolio for all stock weights
Raw data >
sss
-------------------
Related Blogs on Mutual Funds (for a comprehensive list of all articles on Mutual Funds, look for section "4 Mutual Funds" in my blog Blog of Blogs Theme-wise):
Passive Titans of India: The Top 10 Equity Indices by Fund Size 17Jul2025
India Flagship ETFs with Low Fees and Fair Trading Volumes 12Jun2025
Low Expense Ratios, High Returns: Why Passive Equity Funds Matter 06Jun2025
Mutual Fund Asset Class Returns 02Jun2025 (Fund categories with similar returns)
Arbitrage Funds and Avenues 24Jul2024
Rapid Growth is Assets of India's MF Industry 18Jul2024
Mutual Fund Categories with Similar Returns 17Jul2024
Side Pocketing Episode of Aditya Birla SL Dynamic Bond Fund 17Jul2024
India Fixed Income Data Bank 02Jul2024
The Little Secret Behind Nifty Next 50 Index's Recent Success 13May2024
NSE Indices Calendar Year Returns: 2006 to 2024 05May2024
How to Buy Nifty Midcap Index 03May2024
NSE Emerging Indices Comparison 31Mar2024
Guide to Tracking Error of Mutual Funds 27Apr2024
Mutual Fund Asset Class Returns 31Mar2024
Gilt Funds Worth Considering! 14Apr2024
Select Gilt Funds Performance 05Mar2024
Equity ETFs and Equity Index Funds Compared 05Feb2024
Indian Equity ETFs Worth Considering
Analysis of Nifty 100 Low Volatility 30 Index
Quarterly Data of MF Assets 31Mar2023
Understanding Corporate Debt Market Development Fund (CDMDF)
Negative Impact of Debt Mutual Fund Tax Changes
EPFO Investments in Stocks Via ETFs
NSE Indices (Nifty 50, Nifty Next 50, Nifty 100 and Nifty 500) Comparison 31Dec2022
Why Do Indian Equity MFs Always Disappoint Investors?
Indian Mutual Funds and the Art of Ripping off Investors
Who is Eating My Gold ETF Return?
Mutual Fund Asset Class Returns 31Mar2024 (MF categories with similar returns)
Mutual Fund Asset Class Returns 31Dec2023
-------------------
Read more:
Blog of Blogs Theme-wise
Weblinks and Investing
India Fixed Income Data Bank
Indian Economy Data Bank
India Forex Data Bank
Corporate Groups and Listed Companies 29Dec2024
Corporate Governance Concerns - Indian Companies 13Dec2024
Stocks and Peer Comparison by Industry 16Feb2024
The Pitfalls of Market Timing and Why FOMO is Your Worst Financial Adviser 12Jul2025
JP Morgan Guide to Markets 30Jun2025
The Elusive Current Account Surplus: What 25 Years Data Reveal About India's Trade Balance 30Jun2025
India Flagship ETFs with Low Fees and Fair Trading Volumes 12Jun2025
Low Expense Ratios, High Returns: Why Passive Equity Funds Matter 06Jun2025
-------------------
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.
------------------------
CFA Charter credentials - CFA Member Profile
CFA New Badge
CFA Badge
No comments:
Post a Comment