Nifty 50 stocks - weightage

[neha1101]

I was reviewing SBI nifty 50 portfolio statement (june 2027). The weightage composition is as follows

1. Stocks over 10% weightage - 1 - 13.16% HDFC
2. Stocks over 5% - 2 stocks - Icici and Reliance
3. stocks over 3 to 5% - 5 stocks
4. stocks over 2 to 5% - 5 stocks
5. stocks over 1 to 2% - 13 stocks
6. stocks less than 1% - 24 stocks

How on earth will I make money when 37 stocks are less than 2% weightage of which 24 stocks are less than 1%? Am I glad I started putting incremental money in SBI Nifty 50 equal weighted ETF. Wonder if there is a ETF for the stocks less than 1%

HDFC Bank Ltd.	13.16
ICICI Bank Ltd.	8.88
Reliance Industries Ltd.	8.76
Infosys Ltd.	4.97
Bharti Airtel Ltd.	4.72
Larsen & Toubro Ltd.	3.71
ITC Ltd.	3.34
Tata Consultancy Services Ltd.	3.05
Axis Bank Ltd.	2.96
Kotak Mahindra Bank Ltd.	2.74
State Bank of India	2.72
Mahindra & Mahindra Ltd.	2.42
Bajaj Finance Ltd.	2.15

List of stocks less than 1%

Bajaj Finserv Ltd.	0.96
Grasim Industries Ltd.	0.94
Jio Financial Services Ltd.	0.92
Tech Mahindra Ltd.	0.92
Adani Ports and Special Economic Zone Ltd.	0.92
Asian Paints Ltd.	0.91
Hindalco Industries Ltd.	0.86
Shriram Finance Ltd.	0.85
JSW Steel Ltd.	0.83
Oil & Natural Gas Corporation Ltd.	0.82
Bajaj Auto Ltd.	0.80
Coal India Ltd.	0.77
Nestle India Ltd.	0.76
HDFC Life Insurance Company Ltd.	0.75
Cipla Ltd.	0.73
SBI Life Insurance Co. Ltd.	0.71
Dr. Reddy’s Laboratories Ltd.	0.67
Eicher Motors Ltd.	0.67
Wipro Ltd.	0.65
Apollo Hospitals Enterprise Ltd.	0.63
Tata Consumer Products Ltd.	0.62
Adani Enterprises Ltd.	0.59
IndusInd Bank Ltd.	0.50
Hero MotoCorp Ltd.	0.47

NIFTY NEXT 50 ETF is much better,
Stocks less than 1% is only 3.

Life Insurance Corporation of India	0.90
Swiggy Ltd.	0.65
Bajaj Housing Finance Ltd.	0.47

[pingpong]

There is Nifty 50 Equal Weight Index which probably has ETFs. It has equal weightage for all underlying stocks.

[sandeep_cs]

I believe the main reason is this:

• Market cap-based weighting dynamically adjusts with a company’s price and fundamentals. As a company grows in value, its weight in the index increases — ensuring the index evolves in line with real economic trends.
• On the other hand, equal weighting gives the same importance to a ₹1 lakh crore company as it does to a ₹5 lakh crore giant, which misrepresents their actual impact on the market and economy.

[neha1101]

Yes I am invested in this ETF - Equal weighted one the weightage is 2% spread over stocks. Wondering if there is one for the tail end of 24 stocks which is less than 1%

[neha1101]

@sandeep_cs

a ₹1 lakh crore company as it does to a ₹5 lakh crore giant, which misrepresents their actual impact on the market and economy.

Understood, but wonder if there is a ETF focused on this.

[pingpong]

I don’t think there is one for those 24 stocks explicitly.

[sandeep_cs]

Sorry @neha1101, I’m not aware of any ETF that fits your requirement at the moment. If I come across one, I’ll be sure to update it here.

[Akash_Shah]

@neha1101

How on earth will I make money when 37 stocks are less than 2% weightage of which 24 stocks are less than 1%?

Same way as so many people who invested in nifty 50 over the years made money

Either you believe in index and do index investing, or you do not believe in index and do active investing. This believing in index but not believing in whole of it is kind of neither here nor there approach

[neha1101]

@Akash_Shah

This believing in index but not believing in whole of it is kind of neither here nor there approach

The point being not to be “the so many people” believing in what is provided. When the AMC is giving info about the constituents, it is perfectly ok to review and modity ones strategy. Mine is being invested in the top 50 company of india. For this the start point is Nifty 50 ETF.

Now, 37 companies of the Top 50 has miniscule weightage. Yes I can accept what is served and be like so many people or be constructive and find ways and means to invest in the tail of the Top 50 companies of India by analysing the information provided.

One option is invest in Equal Weighted Nifty 50 ETF along with the regular ETF. This i believe will increase my money which is invested in these tail companies.

Now that the 37 tail stocks is covered by 2% instead of 0.50 or less, the option is to find out is there any other ETF which invest in these low weightage stocks of Nifty 50. I found out Icici pru Nifty 200 quality 30 has higher weightage for 11 stocks who are tail in Nifty 50. But 19 other stocks are not falling under Top 50 but the names are well known and I am sure they are good companies but not falling under top 50.

There is another ETF which I am reviewing, HDFC NIFTY100 Quality 30 ETF. Could not complete this exercise, as I had to stop and reply to this message. So to arrive at my strategy, of being invested with good weightage in Top 50 companies of India, I should have

Nifty 50 - Core portfolio
Nifty 50 Equall Weighted
HDFC Nifty 100 Quality 30 ETF (if the constitutents weights match my need) or Icici Pru nifty 200 quality 30. I prefer HDFC as their basket is of Nifty 100 stocks which will be the top 100 stocks.

By investing in all of the above, I would be, in my understanding have greater weightage which means more of my money invested in the Tail of Nifty 50.
Just trying my best in achieving my objective/strategy and do not want to be the “so many people” who invest in whats given to them, like you mentioned.

Once done, I will go for direct investing in one or two tail stocks if need be after studying their financials in depth.

I have done this exercise with Nasdaq 100 + Faang + MIRAE ASSET S AND P 500 50 ETF.

Need to thank @Bhuvan for this post listing all the ETF in India.

List of all Indian Exchange Traded Funds (ETFs)

A couple of users had asked if there was a list of all ETFs that trade on the exchanges. Here’s the full list of symbols and the underlying benchmark index. All ETFs can be bought and sold on Kite. To buy an ETF, just search for the symbol>add to your marketwatch and place an order. If you wish to invest systematically (SIP) in ETFs, you can now set up SIPs on Kite. Note: Most of the ETFs are illiquid and don’t trade much. Check the market depth to check the volumes and always use a limit ord…

[cvs]

I found this specific part of the original post to be confusing / different from the rest of the original post.

@neha1101

How on earth will I make money when 37 stocks are less than 2% weightage of which 24 stocks are less than 1%?

Because that is what the logic of NIFTY50 is.
Investing in large-cap is about investing in a “winner take all” tendency in the markets.

• Sure, it is not the only way to “make money”.
• Nor is it the best way to “make money” in all periods / each year.

Are we “making money” investing in NIFTY50?
Yes.

Are we exposed mostly to a very few number of stocks (even within that list of 50)?
Also yes (currently).

---

@Akash_Shah

Either you believe in index and do index investing, or you do not believe in index and do active investing. This believing in index but not believing in whole of it is kind of neither here nor there approach

Apart from the above bit about “making money”,
this topic-thread starts with NOT believing in the philosophy of the NIFTY50 index.

IIUC, a NIFTY50 ETF is simply being used as a quicker way to get exposure to a bunch of stocks that happen to partially coincide with the list of stocks that one wishes to purchase. The desired list of stocks is different from NIFTY50, and even any desired stocks that happen to be in the ETF, the desired weightages (% of portfolio) are different,

---

Few thoughts/questions about the execution of this strategy…

Q1. @neha1101 How do you plan to deal with balancing your portfolio to match your strategy in the scenarios where the NIFTY50 index constituents change (or their % changes) over time and you are probably left doing a lot of math due to holding a combination of ETF(s) and individual stocks. In such scenarios, would it have been simpler to directly invest and hold the stocks one is interested in (no ETFs)?

Q2. Are there any tax-advantages with getting exposure to part of one’s desired equity portfolio using an ETF? For example, if holding individual stocks, some of the dividends that one would have received and potentially be taxed-upon, do they get reinvested in ETFs without facing the tax burden / facing a lower tax burden?

Q3. Any other advantages to prefer an ETF-route to achieve only part of one’s desired portfolio?

Q4. Searching around a bit online, this proposed approach sounds a lot like the Core-Satellite investment strategy implemented using ETFs. Is that exactly what it is, or any other nuance involved here?

There appears to be a variety of significant effort involved in the core-satellite approach.

Source