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Equal Nifty 50

Posted By: Admin

In India our two major Equity Indices are Nifty (NSE 50) &  Sensex (BSE 30). Let’s see an example with nifty, investor who has invested in index fund (Nifty 50) might have gained an exceptional return in the historic period, but it doesn’t mean all the 50 stocks in index have done exceptionally well. It’s like 10 or 20 of stocks in index has given a great returns which made Nifty become great. And also the weightage of the stocks & the sectors won’t be the equal.  Years 2018 & 2019, saw a very polarised market with a handful of securities growing leaps and bounds while the rest of the stocks were languishing. At that time Reliance Industries Ltd  had a weightage of  14 % in index; HDFC bank will have 11 %  in index etc. During that period both  reliance industries & HDFC bank it has given a marvellous return, hence growth of nifty has also done pretty great due to more weightage in reliance & HDFC. However if there is a more broadbased rally and if the markets are not polarised,  the rest of the stocks in the index will also show tremendous performance. In such a scenario a more representative portfolio will provide an opportunity for a greater return. 

Equal Nifty 50 – 

The name itself says everything; Equal Nifty 50 all the 50 stocks in index will have a same weightage in this fund i.e 2% each. This helps to diversify  risk & help other stocks to lead the fund in terms of return. The weightage of 2% in every stock will be realigned every quarter. Out performing stocks profit will be booked and more stocks will be bought in underperforming shares which will grow in the future. For the past three years stocks like Reliance, HDFC, and TCS etc. have done pretty good when compared to others stocks in nifty. It is called polarization. Which means a specific stocks & sector have outperformed in the market. As this is the time for depolarization where other stocks in index to outperform which will lead this Equal Nifty 50 fund to give good  returns.

Taxation - 

Since  it is equity oriented mutual funds, if the fund is redeemed after one year the gain will be considered as long term capital gain which will be taxed at 10%.If the fund is redeemed below one year the gain will be considered as short term capital gain which will be taxed at 15%.

Conclusion - 

Investor can invest in Equal Nifty 50 instead 0f Nifty 50 which will help them to diversify risk in terms of weightage in stocks & sectors. Investor who can stay invested for 7 to 10 years can look into this fund.

 

Top 10 Stocks In Nifty 50

Nifty 50

Equal Nifty 50

Sl.NO

Stocks

% Percentage

% Percentage

1

Reliance Industries Ltd

9.63%

2%

2

HDFC Bank Ltd

9.11%

2%

3

Infosys Ltd 

8.74%

2%

4

ICICI Bank Ltd 

6.92%

2%

5

Housing Development Finance Corporation Ltd

6.44%

2%

6

Tata Consultancy Services Ltd

4.80%

2%

7

Kotak Mahindra Bank Ltd

3.55%

2%

8

Hindustan Unilever Ltd

3.05%

2%

9

Larsen & Toubro Ltd

2.83%

2%

10

AXIS Bank Ltd

2.67%

2%

By Naryanan

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