Nifty Total Market Index vs Nifty 50: A Comparative Analysis

28 September 2023
6 min read
Nifty Total Market Index vs Nifty 50: A Comparative Analysis
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Since its inception, the Nifty 50 has become almost synonymous with the Indian stock market. People use the index as an indicator of what is happening in the market and the overall mood of investors.

But it is certainly not the only one. There are several other indices that can be used as indicators of the Indian capital market. Nifty Total Market Index, for instance, is another popular index for a broader overview.

While Nifty 50 showcases the 50 largest companies by market capitalisation, Nifty Total Market Index goes beyond. It covers the top 750 companies in the Indian stock market, ranging across the large-cap, mid-cap and small-cap segments.

So, how do these two indices measure up against each other? Let’s find out!

Components and Constituents

As you can imagine, there are certain overlaps in the constituents of the two indices.

Nifty 50 contains the 50 largest companies in the Indian stock market by market cap, and Nifty Total Market contains the top 750 companies by market cap. This means all the companies included in Nifty 50 are also included in the Nifty Total Market Index. But the weightage of each company is different for each index.

Here, we have broken down the top ten constituents of both the Nifty 50 and the Nifty Total Market Index by weightage.

Top Constituents of the Nifty 50 by Weightage

Company’s Name

Weight in Nifty 50 (%)

Weight in Nifty Total Market (%)

HDFC Bank Ltd.

13.77

8.52

Reliance Industries Ltd.

9.56

5.92

ICICI Bank Ltd.

7.87

4.87

Infosys Ltd.

6.01

3.72

ITC Ltd.

4.55

2.82

Tata Consultancy Services Ltd.

4.04

2.50

Larsen & Toubro Ltd.

3.84

2.37

Axis Bank Ltd.

3.13

1.94

Kotak Mahindra Bank Ltd.

3.04

1.88

Hindustan Unilever Ltd.

2.63

1.63

Source: NSE (Data as on 31 August 2023)

Representation and Coverage Comparison

Nifty 50 represents about 62% of the total free float market capitalisation of all the companies listed on the National Stock Exchange as of September 30, 2022. 

The Nifty Total Market Index, as you can imagine, covers much more than that. At any point, it includes all the stocks that make up the Nifty 500 and the Nifty Microcap 250 indices. Hence, it definitely offers a broader representation. 

For instance, Nifty 50 includes only large-cap stocks, while Nifty Total Market includes the entire range from large-caps to microcaps. Because of the larger number of stocks, it also includes more diversification in terms of the sectors included. Nifty 50 leans more towards financial services and IT, while the Total Market Index provides a more varied portfolio.

Sector Weightage (%) in Nifty 50

Sector

Weight (%)

Financial Services

37.00

Information Technology

13.66

Oil, Gas & Consumable Fuels

11.35

Fast Moving Consumer Goods

9.30

Automobile and Auto Components

6.05

Healthcare

4.09

Construction

3.84

Metals & Mining

3.70

Consumer Durables

3.24

Telecommunication

2.52

Power

2.21

Construction Materials

1.90

Services

0.78

Chemicals

0.35

Source: NSE (Data as on 31 August, 2023)

Sector Weightage (%) in Nifty Total Market

Sector

Weight (%)

Financial Services

30.56

Information Technology

10.06

Oil, Gas & Consumable Fuels

8.34

Fast Moving Consumer Goods

8.05

Automobile and Auto Components

6.22

Healthcare

5.59

Capital Goods

5.31

Consumer Durables

3.72

Metals & Mining

3.29

Construction

2.95

Power

2.74

Chemicals

2.73

Consumer Services

2.59

Construction Materials

2.19

Telecommunication

2.06

Services

1.48

Realty

0.97

Textiles

0.53

Media, Entertainment & Publication

0.41

Diversified

0.13

Forest Materials

0.07

Utilities

0.02

Source: NSE (Data as on 31 August, 2023)

Groww Mutual Fund is all set to launch the Groww Nifty Total Market Index Fund - an open ended scheme replicating/tracking the total market index.

The scheme is India’s first total market index fund. Groww Nifty Total Market Index Fund aims to give investors a broader view of the Indian stock market. The scheme will follow a passive investment strategy, meaning it will track the performance of the stocks present in the underlying index. The NFO (New Fund Offer) opens on 3 October 2023 and closes on 17 October 2023.

Historical Performance Analysis

Both Nifty 50 and Nifty Total Market have shown consistent growth in the past. Nifty 50 has shown an average annual price growth of 11.21% since inception, while Nifty Total Market has grown by about 12.99% in price.

Here's a closer look at their growth numbers:

  • Nifty Total Market Index Performance

Timeframe

Price Return (%)

Total Return (%)

Since Inception

12.99

14.54

1 Year

11.37

12.35

5 Years

11.32

12.54

Source: NSE (Data as on 31 August, 2023)

  • Nifty 50 Index Performance

Timeframe

Price Return (%)

Total Return (%)

Since Inception

11.21

 

1 Year

8.42

9.53

5 Years

10.51

11.84

Source: NSE (Data as on 31 August, 2023)

Please keep in mind, however, that this growth is not linear. The stock market is volatile, to say the least, and the indices reflect this in terms of price action. There may be periods of up-trend or down-trend. 

During the COVID-19 crisis, for instance, the stock market experienced a significant fall. Nifty 50 faced a major setback reducing to 1,135.20 points, which was a decrease of 12.98%. This brought the index to a close of 7,610.25, marking one of its worst performances in history.

Comparison Summary

Here's how the Nifty Total Market Index and Nifty 50 stack up against each other:

Features

Nifty Total Market Index

Nifty 50

TR Index Returns (1 year)

18.45%

15.90%

TR Index Returns (3 years)

24.71%

21.81%

TR Index Returns (5 years)

15.13%

13.74%

TR Index Returns (10 years)

16.33%

14.46%

TR Index Returns (15 years)

13.79%

12.67%

Stock Count

750

50

Sectoral Representation

Diverse across multiple sectors

Mainly top-performing sectors

Company Size Representation

Large-cap, mid-cap, small-cap and micro-cap

Primarily large-cap

Weightage Criteria

Free float market capitalisation

Free float market capitalisation

Objective

Broad market exposure          

Representing top 50 stocks by market cap

Implications for Investors 

For investors, both indices offer a snapshot of the Indian stock market.

Nifty Total Market provides a broader view, covering companies of all sizes across various sectors. It is ideal for a highly diversified approach, spreading across market caps and sectors. In contrast, Nifty 50 focuses only on the large caps. These are the biggest companies in the Indian stock market and the most important market drivers.

The choice depends on the purpose of the investor. If they want a complete snapshot, the Nifty Total Market Index is the answer. But, if they want a representative sample, the Nifty 50 can fit the purpose.

Conclusion

Since their inception, both Nifty Total Market and Nifty 50 have cemented their place in the lives of investors. They have emerged as important indicators of what is happening in the stock market.

Whether you're looking for broad exposure or focusing on the top players, the key lesson is to understand your investment goals and align them with the appropriate index. 

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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