What is Nifty Next 50

Indian equity markets use indices to classify and track groups of listed companies based on defined criteria. The Nifty Next 50 represents companies ranked immediately after the Nifty 50 by free-float market capitalisation, capturing a segment that sits between established large-cap indices and broader market categories.

The Nifty Next 50 is an index created by the National Stock Exchange (NSE) that comprises the 50 companies ranked immediately after the Nifty 50 in terms of free-float market capitalisation. These are companies that hold the 51st to 100th positions in the broader Nifty 100 index.

Some important points about the Nifty Next 50 include:

• It is a part of the Nifty 100 family, serving as a feeder index for potential Nifty 50 entrants

• It reflects the performance of large and mid-sized companies with significant growth potential

• Companies in this index can eventually move to the Nifty 50 if they meet size and liquidity requirements

In simple terms, the Nifty Next 50 consists of companies that rank just below the Nifty 50 based on market capitalisation.

The Nifty Next 50 index is defined by a specific set of structural and operational characteristics that distinguish it from other market indices. These features outline how the index is constructed and how it functions within the broader index framework.

• Constituent selection:
  The Nifty Next 50 includes companies ranked from 51 to 100 based on free-float market capitalisation within the Nifty 100 universe.
  

• Index positioning:
  It sits immediately below the Nifty 50 and acts as a transitional segment between large-cap and emerging large-cap companies.
  

• Periodic rebalancing:
  The index is reviewed at regular intervals, allowing companies to move in or out based on changes in market capitalisation and liquidity criteria.
  

• Sector representation:
  The Nifty Next 50 reflects a mix of sectors, capturing companies across industries rather than concentrating on a single segment.
  

• Market linkage:
  Companies from the Nifty Next 50 may move into the Nifty 50 if they meet the required eligibility thresholds during index reviews.

Together, these features explain how the Nifty Next 50 is structured and maintained within India’s equity index ecosystem.

The Nifty Next 50 is commonly tracked in the context of market segmentation beyond the largest listed companies. The following aspects describe how the index is positioned and used within the broader index framework.

• Constituent profile: Companies in the Nifty Next 50 are generally positioned between established large-cap indices and broader market segments, based on free-float market capitalisation.

• Diversification: It offers exposure to multiple sectors such as banking, FMCG, IT, pharmaceuticals, and manufacturing.

• Market insights: Several companies that later form part of the Nifty 50 have previously been constituents of the Nifty Next 50, reflecting its role within the index hierarchy.

• Passive investment options: Several mutual funds and exchange-traded funds (ETFs) track this index, making it accessible without needing to pick individual stocks.

Exposure to the Nifty Next 50 can be obtained through different market-linked structures that mirror or derive from the index. These approaches describe the commonly used mechanisms through which market participants invest in Nifty Next 50–linked instruments, without involving direct stock selection.

• Index funds tracking the Nifty Next 50:
  These mutual funds are structured to replicate the composition and performance of the Nifty Next 50 by holding the same stocks in similar weights. Fund performance moves in line with index changes, subject to tracking differences and expenses.
  

• Exchange-Traded Funds (ETFs):
  ETFs linked to the Nifty Next 50 are listed on stock exchanges and trade like equity securities. Their prices fluctuate during market hours based on demand, supply, and the underlying index value.
  

• Derivative-linked exposure:
  In certain market segments, derivatives or structured products may reference the Nifty Next 50 as an underlying benchmark. These instruments are governed by exchange and regulatory specifications.
  

• Portfolio-based allocation:
  Some portfolios include Nifty Next 50–linked instruments as a component within a broader asset allocation framework, alongside other indices or asset classes.
   

These approaches outline how exposure is structured for those looking to invest in Nifty Next 50 through index-linked instruments rather than individual stock selection.

Read More: What is Nifty 200 Index

The Nifty Next 50 index has distinct characteristics that set it apart within the equity index landscape.

• Index positioning:

It comprises companies ranked immediately after the Nifty 50 by free-float market capitalisation.

• Sector spread:

The index includes constituents from multiple sectors, resulting in broad-based representation.

• Performance profile:

The index reflects market movements of companies that are often in growth-oriented phases, leading to return patterns different from established large-cap indices.

• Index-linked access:

The Nifty Next 50 is tracked by index funds and exchange-traded funds.

These points outline how the Nifty Next 50 operates as a separate index category within the market.

The Nifty Next 50 index is subject to certain risk-related characteristics:

• Stocks in this index are generally more volatile than Nifty 50 constituents

• Some companies may have lower liquidity compared to Nifty 50 stocks

• Sectoral cycles can impact index performance when specific industries underperform

Index movements can vary across market cycles, reflecting changes in economic conditions and sectoral trends.

Historically, the Nifty Next 50 has witnessed periods of strong outperformance relative to the Nifty 50 during varying market phases. During broader market upswings, movements in the index have reflected the performance of its underlying constituents, while during periods of heightened volatility or market corrections, price movements have been comparatively more pronounced.

These historical patterns illustrate how the Nifty Next 50 has responded to different market conditions over time.

The Nifty Next 50 index is commonly referenced in contexts involving the following allocation patterns:

• Longer holding periods:

The index is often associated with market participants focusing on extended time horizons rather than short-term price movements.

• Higher volatility exposure:

Price movements in the index tend to reflect greater variability compared to more established large-cap indices.

• Index-linked participation:

Exposure to the index is typically accessed through passive instruments such as ETFs and index funds.

The index is generally discussed separately from market segments that emphasise lower volatility or income-oriented objectives.

The Nifty Next 50 represents a segment of the equity market comprising companies ranked immediately below the Nifty 50 by free-float market capitalisation. As an index, it reflects the performance of these constituents within the broader market framework and is tracked through various index-linked instruments.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.