Nifty 50 vs. Nifty Next 50: Which Index Should You Focus On?
India is one of the fastest-growing economies in the world, with a GDP growth rate of about 6.5% in 2024. In fact, some reports say that the country is expected to have an annual GDP of $7 trillion by the end of this decade.
This booming economy provides an excellent opportunity for people to invest in the stock market and grow their returns. But the catch is that you cannot invest in this market without a clear idea of two important indices, NIFTY 50 and NIFTY Next 50.
But there’s no need to be concerned because this blog will explore these indices in detail and help you better understand the market. So, let’s dive in without any further ado!
Table of Contents
What is the NIFTY 50 Index?
The NIFTY 50 index is basically a measurement of the top 50 large-cap companies in the
country. This index is unique because it bases its calculation on the free-float market capitalisation. This means you will not calculate any inactive shares and instead focus on the market value of the available and active shares.
What is the NIFTY Next 50 Index?
The NIFTY Next 50 index is another very important index that includes the next fifty companies based on their market capitalisation after the NIFTY 50. Most people will refer to these companies as emerging since they highlight the potential of becoming a successful leader shortly. The only difference here is that these companies are not as big as the ones you see in NIFTY 50, but they offer many opportunities to grow your wealth.
Key Differences Between NIFTY 50 and NIFTY Next 50 Indexes
While there are multiple differences between NIFTY 50 and NIFTY Next 50, we will look at the breakdown of some key differences. So, let’s dig in:
| NIFTY 50 | NIFTY Next 50 |
| Has companies from many different sectors | Unmatched growth potential despite being relatively smaller than NIFTY 50 companies. |
| Tracks the performance of 50 large-cap companies in the country. | Includes different companies from sectors that are still growing. |
| Has noteworthy influence over the market | It is generally more volatile compared to the NIFTY 50 companies. |
Year-Wise Performance Comparison Between NIFTY 50 and NIFTY Next 50 Performance
Most people have this presumption that NIFTY 50 and NIFTY Next 50 are both large-cap indexes, which will not significantly affect their performance. However, as is the case with everything else in the stock market, the reality is far from this presumption. So, let’s check out a year-wise performance comparison between both indices to make an informed choice:
| Year | NIFTY Next 50 | NIFTY 50 TRI |
| 2006 | 30% | 42% |
| 2007 | 74% | 54% |
| 2008 | -64% | -51% |
| 2009 | 124% | 72% |
| 2010 | 16% | 18% |
| 2011 | -31% | -24% |
| 2012 | 49% | 29% |
| 2013 | 4% | 7% |
| 2014 | 45% | 32% |
| 2015 | -7% | -4% |
| 2016 | 7% | 4% |
| 2017 | 46% | 30% |
| 2018 | -8% | 6% |
| 2019 | 2% | 14% |
| 2020 | 16% | 16% |
Which Index Should You Use to Your Advantage?
When it comes to making the right choice between NIFTY 50 and NIFTY Next 50 indexes, there is more than one consideration you need to keep in mind. So, let’s break this down to help you get a better idea and make an informed choice:
Experts recommend that you should leverage the NIFTY 50 index in case you:
- Have a lower risk appetite
- Looking to diversify your portfolio
- Want consistent returns over a long period of time
On the other hand, you must consider investing in the NIFTY Next 50 share price if you are:
- Investing for the long run
- Willing to handle greater risky situations
- Ready to deal with highly volatile market fluctuations
In Conclusion
Any veteran investor will tell you that NIFTY 50 and NIFTY Next 50 have shortcomings and strengths. So, as an investor, it boils down to your ability to analyse the market and make the right choice accordingly. This is why you need the information above to make an informed choice and capitalise on every opportunity the market provides.
