The Nifty 50 serves many purposes, the most important among which are that it serves as a benchmark for portfolios, index based derivatives and index funds. The index is managed by a professional team with a 3-tiered structure as follows – Board of Directors of NSE Indices Limited, the Index Advisory Committee (Equity) and the Index Maintenance Sub-committee. It is rebalanced semi-annually and the cut-off dates are January 31 and July 31 of each year. It was launched in April 1996 but its base date is Novemand its base value is 1,000. It is computed using the free float market capitalization method and its value is calculated in real-time. It is owned and managed by NSE Indices Limited and as the name indicates, comprises 50 stocks covering 13 sectors. The Nifty (a combination of NSE and Fifty) 50 index, is a diversified benchmark index that tracks the performance of the top large-cap companies listed on the NSE. The Nifty 50 index is one of the two most widely used indices for the Indian markets, with the other being the Sensex. This presentation by Nippon India Mutual Fund gives an overview of ETFs, Nifty BeES and the other ETFs managed by the AMC. It is, however, possible for the ETF to trade at above or below its NAV though not usually on a long term or sustained basis. ETFs provide investors exposure to the underlying asset and seek to closely track its performance. These represent proportionate ownership in the underlying portfolio or basket of securities / assets and the forces of demand and supply determine the price at which the ETF trades on the exchange. There are several types of ETFs based on what they track – an index, a commodity, a currency, or even an investment style. Shares of an ETF can be freely bought and sold on an exchange much like a stock. In this case, Nifty BeES tracks the Nifty 50 index. An ETF will track an underlying asset, index, commodity or currency. Popularly credited with combining the benefits of mutual funds and trading in stocks, ETFs are a type of security that can be bought and sold on an exchange much like a stock.
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