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What is Junior Nifty in stock market?

Greater diversification, lower risk, ownership of a wide variety of stocks — all at a low price, it doesn't get better than this! And this is why several investors, especially new ones, seek to invest in index funds over individual stocks. One such promising and popularly-traded index is the Junior Nifty, also referred to as the Nifty Next 50.

What is Junior Nifty?

If you follow stock markets closely, you would have probably heard of the Nifty 50 index. It comprises the 50 largest companies based on their market capitalization in India. Trailing behind is the Junior Nifty, now called the Nifty Next 50 including the next 50 largest companies by market capitalization.

Let’s look at some interesting trivia behind the Junior Nifty.

  • The Junior Nifty is owned and operated by NSE Indices Limited. 
  • The index is identified by the symbol NSMIDCP.
  • As of October 29, 2021, the Junior Nifty consists of stocks from 17 different sectors, more diversified than the Nifty 50, which includes stocks from 13 sectors.
  • It was launched on December 24, 1996, with its base date as November 04, 1996.

 

Characteristics of Junior Nifty index

1.  Composed of large-cap stocks

The first thing to note about the Junior Nifty index is that it consists of large-cap stocks. These are the 50 companies from the Nifty 100 index after excluding Nifty 50 companies.  

2.  Well-diversified

As mentioned above, the Junior Nifty of Nifty Next 50 is a diversified index. it consists of stocks from 17 different sectors of the Indian economy. The top 5 stocks in the index constitute 19.11% of the total index weight compared to 41.49% in the Nifty 50 index as of December 31, 2021.

3.  A Nifty 50 incubator

Did you know that the Nifty Next 50 or the Junior Nifty index is regarded as an incubator for the Nifty 50 index? As the market capitalization of companies changes, listed firms in the Junior Nifty get bumped up to the Nifty 50. This happens all the time. That means any new companies that make it to the Nifty 50 may come from the Junior Nifty.

4.  Superior returns

The Junior Nifty has consistently given strong returns. In the last 10 years, it provided investors with an absolute return of 377.82%, while the Nifty 50 returned 275.21%. Even in the short term, Junior Nifty outperformed the Nifty – its one-year absolute returns is at 27.32% compared to 25.36% of Nifty 50 as of January13, 2022.  

How to invest in Junior Nifty

If you’re looking to invest in the Junior Nifty or the Nifty Next 50, you can do so through index funds or Exchange-Traded Funds [ETFs]. You can opt to invest through the Systematic Investment Plan [SIP] route. However, if you hold a demat account, you can invest through ETFs.

Also Read: Best Stocks to Buy in 2022

Conclusion

  • The Junior Nifty also called the Nifty Next 50, is an index of large-cap stocks from Nifty 100 after excluding the stocks of Nifty 50.
  • The Junior Nifty is a diversified index, both sector-wise and equity-wise.
  • Index funds and ETFs are two ways to invest in the Junior Nifty.

 

Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100.  AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein mentioned are solely for informational and educational purpose.

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