Category : Investing Guides September 18, 20255 minutes read
The Nifty 50 comprises India’s top 50 blue-chip companies by market capitalisation, while the Nifty Next 50 includes the next 50 largest companies poised to enter the Nifty 50. The difference between Nifty 50 and Nifty Next 50 lies in their market position, risk-reward profile, and volatility, making each suitable for different investor goals.
When comparing Nifty 50 vs Nifty Next 50, investors should understand the strengths and risks of both. The Nifty 50 index fund represents mature, relatively stable companies and is generally less volatile, while the Nifty Next 50 index fund holds higher growth potential but comes with greater risk. A detailed look at the performance of Nifty 50 vs Nifty Next 50 shows that while Nifty 50 offers consistency, the Nifty Next 50 has outperformed in certain market phases. Hence, the choice between Nifty 50 and Nifty Next 50 depends on your risk appetite and investment horizon.
The Nifty 50 index is a benchmark index of the National Stock Exchange (NSE) that tracks the performance of the top 50 listed companies in India across various sectors. These companies are leaders in their industries, have strong fundamentals, and represent the overall health of the Indian economy. Investors often look at the Nifty 50 to gauge market trends or invest through Nifty 50 index funds for long-term growth.
The Nifty Next 50 index comprises the 50 companies that rank just below the Nifty 50 in terms of market capitalisation. These are high-potential businesses that are not yet in the top 50 but could grow into future market leaders. While the Nifty Next 50 is more volatile, it also offers greater scope for potential returns due to the growth opportunities these emerging companies present.
In this guide, we’ll compare the differences between Nifty 50 vs Nifty Next 50, how they are constructed, and what makes each unique from an investor’s point of view. We’ll compare the performance of Nifty 50 vs Nifty Next 50, look at long-term returns, and help you evaluate which of these, Nifty 50 or Nifty Next 50 fits your investment goals better.
The Nifty 50 index tracks the top 50 companies listed on the NSE based on free-float market capitalisation. These are large, established businesses across key sectors like banking, IT, and FMCG. Stocks are chosen based on size, liquidity, and trading activity, and the list is reviewed semi-annually. Compared to the Nifty Next 50, the Nifty 50 may potentially offer moderate growth.
Nifty 50 Index Mutual Funds
Nifty 50 Index mutual funds aim to replicate the index by investing in the same 50 companies in equal proportion. They are low-cost, passively managed funds suitable for long-term investors seeking relatively steady returns with lower risk. The Nifty 50 fund suits conservative investors, while the Next 50 may appeal to those seeking higher growth.
Read more about the Nifty 50 index in India.
The Nifty Next 50 Index includes the 50 companies that come right after the Nifty 50 in terms of market capitalisation.They can be considered future large-cap leaders—firms that are growing steadily and could eventually make it to the Nifty 50. While the Nifty 50 features India’s most established blue-chip stocks, the Nifty Next 50 is made up of ambitious businesses with high growth potential. When comparing Nifty 50 vs Nifty Next 50, the latter tends to be more volatile but also has the potential to offer greater upside during bullish markets.
The difference between Nifty 50 and Nifty Next 50 lies mainly in maturity and potential stability—Nifty 50 stocks are well-known names, while the Next 50 includes rising stars. So, when deciding between Nifty 50 or Nifty Next 50, it comes down to your risk appetite. The performance of Nifty 50 vs Nifty Next 50 varies over time—Next 50 may outperform in strong markets, but Nifty 50 has the potential to be steady during downturns.
Nifty Next 50 Index Mutual Funds
Nifty Next 50 Index mutual funds are index-based funds that track the performance of the Nifty Next 50 index. These funds invest in all 50 companies in the same proportion as the index, offering investors access to high-potential businesses that aren’t yet part of the Nifty 50. A Nifty Next 50 index fund typically offers more growth potential compared to a Nifty 50 index fund but also carries more short-term volatility.
For investors who already have exposure to blue-chip companies, adding Nifty Next 50 mutual funds can help capture the next wave of market leaders. While returns of Nifty 50 and Nifty Next 50 returns can swing in either direction depending on market conditions, combining both may help balance out your portfolio over the long term.
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The Nifty Next 50 includes high-growth companies just below the Nifty 50 in size. It’s more volatile but may offer higher returns in strong markets. Nifty 50 may potentially be more stable, while Next 50 suits higher risk appetites. Combining both may potentially balance growth and stability.
Over the last couple of years, the Nifty Next 50 has had a strong run, outperforming the Nifty 50—though it has done so with sharper ups and downs. According to data from the NSE, the Nifty 50, which tracks India’s top 50 large companies, delivered about 12.39% annual returns over a 3-year period. On the other hand, the Nifty Next 50, made up of fast-growing large-cap companies just outside the top 50, clocked in at a higher 19.43% CAGR during the same time.
But with higher returns comes higher risk. The Nifty Next 50 also saw more market swings, with volatility at 17.88%, compared to 14.17% for the Nifty 50. Over the long term too, data shows that the Nifty Next 50 has outperformed the Nifty 50 in a majority of five-year periods—but it hasn’t been a smooth ride.
So, which one should you pick? If you prefer stability and lower fluctuations, the Nifty 50 might suit you better. But if you’re okay with a bit more market movement for the chance at higher returns, the Nifty Next 50 could be worth exploring.
Let’s understand the key differences between Nifty 50 and Nifty Next 50
| Parameter | Nifty 50 | Nifty Next 50 |
| Meaning | Represents the top 50 large-cap companies in India. | Represents the next 50 emerging large-cap companies. |
| Stock selection | Based on free-float market capitalisation, size, and liquidity. | Includes emerging companies with growth potential. |
| Liquidity | High liquidity due to established companies. | Lower liquidity compared to Nifty 50, but still relatively high. |
| Volatility | Lower volatility as it includes well-established companies. | Relatively higher volatility due to the emerging nature of the companies. |
| Market Presentation | Snapshot of India’s largest companies and market leaders. | Offers insight into the next generation of large-cap stocks. |
| Risk | Relatively lower risk, more potential stability, may be suitable for conservative investors. | Higher risk with greater growth potential, may be suitable for risk-tolerant investors. |
- The difference between Nifty 50 and Nifty Next 50 lies in their composition: the Nifty 50 includes India’s top 50 large-cap companies, while the Nifty Next 50 features the next 50 emerging large-cap firms that could potentially move up.
- The comparison between Nifty 50 index fund and Nifty Next 50 index fund shows that the former may be more suitable for conservative investors seeking relatively consistent returns, while the latter may appeal to growth-oriented investors willing to accept more risk.
- Nifty 50 and Nifty Next 50 differ in terms of volatility. Nifty 50 has lower volatility and offers more consistent performance, while Nifty Next 50 is more volatile but has higher upside potential.
- Over the past 2–3 years, the performance of Nifty 50 vs Nifty Next 50 shows that the Nifty Next 50 delivered around 15.5% annualized returns, outperforming the Nifty 50’s 12.9%, but with greater fluctuations.
- Historical trends indicate that the Nifty Next 50 has outperformed the Nifty 50 in about 67% of 5-year rolling return periods, reinforcing its potential for higher long-term gains despite the risks. Source: NSE India
- The comparison between the returns of the Nifty 50 and Nifty Next 50 suggests that while Nifty 50 offers potentially reliable, low-risk returns, Nifty Next 50 carries higher risk but can reward investors during market upswings.
- Liquidity is better in the Nifty 50 due to its established companies, while Nifty Next 50 has slightly lower but still decent liquidity, making it a viable option for long-term investment.
- The choice between Nifty 50 and Nifty Next 50 depends on your investment style—choose Nifty 50 for potential stability, or Nifty Next 50 for higher growth potential and willingness to accept volatility.
