Nifty 100

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What is Nifty 100?

NSE 100, also known as NIFTY 100, is a stock market index representing the major sectors of the Indian economy. NIFTY 100 comprises top 100 companies based on full market capitalisation and the index intends to track their performance. Of these 100 companies, 50 are listed on NIFTY 50 whereas the remaining 50 are a part of the NIFTY Next 50.

*Note: Prices that are specified above is based on INR

Companies listed on the Nifty 100

Considering the sector-wise representation of NIFTY 100, financial services hold the highest weightage at 32.47%. Trailing at the second place is energy sector with 13.65%. This is followed by consumer goods segment, IT, and automobile.

*Note: Last Updated on 10 July 2018

Factors affecting NIFTY 100

Stock markets, as we know, are susceptible to a variety of factors, ranging from complex issues like country’s economic performance and its GDP, to politics, people psychology, the performance of industries, interest rates, et cetera. Furthermore, these determinants can either be of paramount significance or just an one-time occurance.

This is one of the reasons why stock market indices serve as an important benchmark when it comes to judging a country’s economic health - they factor in all the significant developments.

In India, SENSEX and NIFTY are two of the most important indices. Some of the factors affecting these are:   

• Stability of the Government - Changes in government policies and personnel have led to changes in NIFTY 100 over the years. Similarly, the budget and election results are also known to have an impact on NIFTY.     

• Index of Industrial Production (IIP) - This index is a representation of the growth of various sectors of Indian economy.   

• RBI interest rates and repo rates - A change in interest rates is linked to inflation and in India, the decision is taken by the Reserve Bank of India.     

• International markets performance - Developments around the world and the corresponding performance of international markets can impact NIFTY, since the markets are correlated.

• Inflation - As stated earlier, interest rates are primarily decided by inflation data, and they have a direct impact on the economic growth of the country. If the inflation is high, then the banks will be compelled to increase the interest rates to control this. This will, in turn, lead the investors to park their money with the bank instead of stocks.

• Gold prices - Returns on gold may not be as lucrative as equities, but it is still a considerably safer investment. Furthermore, it serves as a hedge against inflation which is why, many investors have gold as a part of their diversified portfolio. An increase in price of gold is perceived as a sign of bear market since it implies that people are reluctant to park their funds in equities and stocks.   

• Gross Domestic Product - Gross Domestic Product, also known as GDP, is a clear indicator of the growth and performance of the country’s economy. A better GDP will boost investor confidence and lead them to invest in the markets.   

Apart from these, there are other factors that determine the performance of NIFTY like fuel price volatility, upgrade/downgrade in ratings, recession/economic boom, et cetera.

What are the stocks that play a vital role in the movement of Nifty 100?

As mentioned earlier, more than 30% of the stocks in the NIFTY 100 come from the financial services sector. This includes some of the leading banks and financial institutions like Bajaj Finance Limited, Bank of Baroda, HDFC Bank, Axis Bank, et cetera. Therefore, any news or development that impacts the banking industry is quite likely to have an impact on NIFTY 100. Other sectors that hold a considerable share in the NIFTY 100 are energy, consumer goods, and I.T.

However, if we are to consider the individual components, HDFC Bank has the highest weightage at 8.07%, followed by Reliance Industries Limited at 6.89% and Housing Development Finance Corporation at 6.05%. Any significant movement in the stocks of these companies can affect the NIFTY 100.

Furthermore, international market indices like S&P 500 and Dow Jones Industrial Average can also have affect the NIFTY 100.

How to invest in Nifty 100?

Considering that NIFTY 100 is a stock market index comprising 100 companies, to invest in NSE 100, one will have to invest in all its constituents. While it is possible to invest in all the 100 companies, it may not appear to be that feasible. Needless to mention, a thorough research must be undertaken before investing.

Many companies that are listed on the NSE are listed on the BSE as well. To invest in any of these companies, all one has to do is open a demat account and a trading account with any of the numerous brokers in India. Once the account has been opened, shares of a NIFTY 100 company can be bought and sold.

Stocks vs. Mutual Funds: Here's What We Recommend

Stock market investments require a lot of research and knowledge. They do not generally offer any tax benefits and are regarded as high-risk investments. Hence,it is crucial to have a diversified portfolio. At Bankbazaar, we encourage our readers to invest on mutual funds.It doesn't require a lot of knowledge and equity linked mutual fund schemes offer tax benefits. Additionally, since mutual funds comprise stocks from multiple companies, they help in building a diversified portfolio.

DISCLAIMER:

The contents of this post/blog does not constitute financial or other professional advice nor does it imply in any manner a principal-agent relationship, and is not a professional advice on a specific financial matter.

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