India’s Growth Story

Since the year 2000, India’s GDP has been exponentially on the rise.

Flourishing businesses, rising start-ups, and increasing talent came together to make India the 5th largest economy in the world in 2022.

What is the Nifty 500 index?

The Nifty 500 index captures the performance of the top 500 companies in the Indian stock market, including every entity from the Nifty 50, making it a barometer of the Indian stock market's overall performance.

It is a combination of its component indices - Nifty 50 Index, Nifty Next 50 Index, Nifty Midcap 150 Index, and Nifty Small Cap 250 Index.

Nifty 500 covers more than 90% of India’s listed equity universe
Nifty 50 covers just 51% of India's listed market

Nifty 500 index vs Nifty 50 index

India's Growth Potential

With India's economy getting ready to grow quickly in the next few years, investors have a chance to benefit from this growth. Because the Nifty 500 index fund includes more than 90% of India's listed market, it is a smart way to explore varied investment opportunities and be part of the country's expanding economy.

Optimal Balance of Returns

Over the last 2 decades, Nifty 50 has grown only by 23 times whereas Nifty 500 has grown by a whopping 30 times. Because of its exposure to smallcaps and midcaps, the Nifty 500 is expected to deliver better returns over the long-term.

Extensive Market Coverage

Over time, the Nifty 50 has included only a small chunk of India's total market value, currently accounting for slightly over 50%. But the Nifty 500 Index Fund, as mentioned above, covers more than 90% of all the companies listed in India; more like a bigger slice of the investing pie.

Diversification

While Nifty 50 offers coverage to just 14 out of 21 sectors, the Nifty 500 offers coverage to all the 21 sectors. It is safe to say that it provides superior diversification at both the sector and stock levels, offering you a well-rounded portfolio.

Reduced Stock-Level Concentration

Unlike narrower indices focusing only on a few companies, the Nifty 500 Index Fund has spread out its investments to minimise the concentration. This way, if one company doesn't do well, it won't hurt the whole bunch.

Lesser long-term volatility

Over the long term, the Nifty 500 index reported the least volatility as compared to its component indices like Nifty 50 and Nifty Midcap 150, making it a reliable and steady investment avenue.

Characteristic	Nifty 50	Nifty 500
India's listed market-cap coverage	Lower (51%)	Higher (92%)
Size Coverage	Largecap only	Large, Mid, and Smallcaps
Sector-level Diversification	Lower (Top 3 - 62%)	Higher (Top 3 - 51%)
Stock-level Diversification	Lower (Top 10 - 59%)	Higher (Top 10 - 38%)
Long-term returns	Lower	Higher
Long-term Volatility	Higher	Lower

Investing in the Nifty 500 index

An index fund based on Nifty 500 is a popular choice for those looking for broader market exposure, encapsulating the vastness and diversity of the Indian stock market.

This comprehensive coverage offers an opportunity to tap into the potential of not just the market leaders but also the rising stars. Unlike its Nifty 50 counterpart, investing in an index fund based on Nifty 500 allows investors to gain exposure across a wide array of sectors.

This includes not only the large-cap companies but also the mid and small-cap sectors which often hold significant growth potential.

FAQs

What is the Nifty 500 Index?

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Need help to understand Index Funds better?

Blogs

Nifty 500 – An index that converts most of the Indian Stock Market

All About Nifty 500 Index

Nifty 50 Index Vs Nifty 500 Index – A Beginner’s Guide

An Investor Education Initiative

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