When a stock is added/removed from the index (which happens semi-annually) or certain kinds of corporate actions occur (like rights issue, mergers, etc), then rebalancing would be required but otherwise, the index is self-weighting in nature and doesn’t require constant changes. Sharing information I came across in a FAQ about Indices on the NSE website -
You say that buying a NIFTY 50 portfolio yields the same returns as percentage changes on the NIFTY 50 index. But the weights will have to keep on changing from day to day when market caps change?
No. The market-cap weighted index is “self weighting”. I.e. when weights change because prices change, yesterday’s index portfolio continues to be today’s index portfolio. Hence a buy and hold strategy is all that is required to replicate index returns under normal circumstances. Note that someone who buys and holds a NIFTY 50 portfolio earns dividends, this should be compared with the NIFTY 50 TR index and not plain NIFTY 50.
Upon revisiting the SBI Nifty 50 ETF website (under the Unit Creation tab), I noticed there had been minor changes in the quantities of multiple stocks in the last one month. I believe you are right in saying that it would be extremely difficult for a person to keep track of these changes and rebalance their portfolio on a regular basis. This likely might have happened because multiple Nifty 50 companies had issued dividends which had to be re-invested back as the ETFs follow the Nifty 50 TR index. Hence my previous reply is partly incorrect as in real-world conditions, there would always be some kind of corporate actions occurring in one of the companies which would require adjustments -
SBI - ETF Nifty 50 - Unit Creation For Date 2021-06-25