Number Theory: How Nifty 50 has changed since its inception in 1995

The index came into existence in 1995 and Nifty 50 has changed over this period

Nifty 50, NSE’s list of 50 companies with the highest market capitalization, crossed 20,000 points for the first time on 12 September . The index came into existence in 1995. Nifty 50 has changed over this period

People look at a screen displaying the Sensex results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai. (REUTERS)

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  The weightage of financial services has almost doubled from 1995

  A comparison of the Nifty in 1995 with that now shows that the financial services sector has broadly made the biggest gains in terms of share in total market capitalization of the index. This is keeping with the increase in share of financial and professional services sub-sector in Gross Value Added (GVA) -- from 17.4% to 22.5% between 1995-96 and 2022-23 according to data from Centre for Monitoring Indian Economy (CMIE). Share of other sectors such as consumer products and automobiles in Nifty 50 have fallen in this period. See Chart 1: Weightage of sectors by market-cap
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  A fall in weightage need not necessarily mean a loss in market-cap

  It is important to understand that a fall in overall weightage of a particular sector need not necessarily entail a loss in market cap, which is the total value of a company’s shares. Data on the contribution of each sector in Nifty50’s growth from 10,000 to 20,000 points proves this point. Even sectors which have seen a fall in their weightage in Nifty 50 between 2015 and 2023 – the Nifty 50 crossed 10000 points in 2017 – made positive contribution to the index’s growth. See Chart 2: contribution of each sector from 10000 to 20000
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  The number of government companies in the index has fallen

  In 2005, there were 12 government-owned companies in the index. This number reduced to seven in 2023. State Bank of India was part of the first set of 50 companies in Nifty 50 in 1995. It is also the only public sector company in the set of companies that have been part of the index since its inception. Companies such as Mahanagar Telephone Nigam Ltd, Oriental Bank of Commerce, and Shipping Corporation of India Ltd, once part of the index, are no longer there in it.
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  Emergence of new entrants and new businesses into Nifty

  There are 11 companies that have been part of the index since its inception. These are companies that are leaders in their corresponding sectors or those that have consistently outperformed. The market capitalization of these 11 companies has increased since 2005, according to data from Bloomberg. The latest entry into the Nifty 50 are the two Adani companies -- Adani Enterprises, and Adani Ports and SEZs. A new trend also seems to have emerged in the last three years -- the presence of two life insurance companies, SBI Life Insurance and HDFC Life Insurance Company Ltd. The list also has LTI Mindtree, which is the result of L&T Infotech’s acquisition of Mindtree. HDFC Ltd exited the index due to its merger with HDFC Bank Ltd, which remains part of it. See Chart4: List of 11 companies that have existed in the index since inception Market Caps

, with the changes roughly mirroring major changes in the economy. To be sure, analysing stock exchange data is in not the best way to analyse economic change as the indices represent large companies, usually market leaders. Still, the composition of an index does tell us about the changing fortunes of the some of the most important sectors and companies in India. Here are four charts which explain some of the important changes in Nifty.