NSE Next 50: facilitating balanced diversification

Nifty 50 and BSE Sensex are the two most widely tracked indices when it comes to indian equities.The one year performance for Nifty 50 is 8.32 per cent and that for BSE Sensex is 8.44 per cent.

Whereas the Nifty next 50 index has delivered approximately 12 per cent in one year. This index is an interesting option over Nifty 50 and Sensex for investing as the index is more diversified when compared to both the indices i.e Nifty 50 and BSE Sensex. Nifty 50 and Sensex are skewed towards Banking & Financial Services & IT. 

For an investor looking for a more balanced diversification Nifty Next 50 could be a more appropriate  index. The Nifty Next 50 Index represents 50 companies from Nifty 100 after excluding the Nifty 50 companies. Nifty Next 50 is computed using free float market capitalisation method, wherein the level of the index reflects total free float market value of all the stocks in the index relative to a particular base market capitalisation value.

The sectorals with maximum weightage for the index are Consumer goods 24.27 per cent, Financial services 19.06 per cent , Energy 11.42 per cent, Pharma 8.67 per cent and Metals 8.45 per cent.