5 ADVANTAGES OF INVESTING IN NIFTY 50!

National Stock Exchange is the leading stock exchange of India. NIFTY is a broad index of NSE and stands for “National Stock Exchange Fifty’. The purpose of the “fifty” is that, it comprises of 50 stocks but right now there are 51 stocks. Owned and managed by IISL {Indian Index Services and Products Ltd.} Nifty stocks are also known as NIFTY 50 or CNX Nifty. You can track the current trends of the market cap stocks in the individual sectors, by sector wise stock checking either daily, quarterly, monthly, half-yearly or yearly.

A country to be a part of Nifty after complying with certain eligibility criteria given below:

Liquidity- The company’s stock should have traded at an average impact cost of 0.50% or less during the last six months, for 90 % of the observations and a portfolio of 2 crores.

Float Adjustment- Companies must have at least twice the float adjusted market capitalization of whatever is the current smallest index.

Domicile- The company should be situated in India and traded on the NSE.

Advantages of Investing in Nifty Stocks

1.   

      High Liquidity- Large players prefer trading in Nifty because of this advantage. High liquidity ensures that the traders can enter and exit their positions easily. Nifty has the highest liquidity in its futures and options category. Investors may find it difficult to sell stocks only when the market crashes.

2.      Lower Spreads- Spreads mean bid-ask difference. Lower the difference the better will be the trading experience. As while trading in Nifty, the future and options are popularly traded, as the bid- ask difference are relatively better there and give you better prices to buy or sell.

3.     

       Easy to predict- Tracking and predicting the ups and downs in nifty, as it provides us information in the form of technical analysis and follows global sentiments.

4.      Cannot be Manipulated- Since the nifty level is determined based on the performance of 50 stocks which involves a set of large players, manipulating such large basket of stocks is not possible.

5.      Well Diversified- Nifty consists of 50 stocks which represent more than 10 different sectors. The diversification provides stability and protects you when you go wrong. It gives a bigger picture of the market in the near and long term.