When mentioned in the investment world, the Nifty 50 usually refers to a group of the 50 most popular large-cap stocks on the New York Stock Exchange (NYSE) in the 1960s and 1970s. Due to their marked stability, the Nifty 50 stocks were viewed as "one-decision" picks because investors were told to buy and hold them forever.
The growth stock companies in the Nifty 50 were characterized by consistent earnings growth and high price-to-earnings (P/E) ratios. They were also credited with propelling the bull market of the early 1970s. The Nifty 50 terminology came to an end in the early 70s amongst the high oil prices, rising interest rates, and political scandals, which led the U.S. economy into a bear market and saw the stock prices of many Nifty 50 companies fall dramatically.
After 1996, Nifty 50 gained an additional meaning in the financial industry, referring to a stock index on India's stock exchange, which exists to this day.
Companies in the Nifty 50
There's no official, definitive list of companies in the Nifty 50, as it was not an official benchmark. The list consisted of companies that had a lot in common with one another: strong balance sheets, consistent growth, and a global reach. Many investing experts agree that the list was comprised of many brands that are still recognizable today; a few of which have seen trouble since their heyday. Some of these companies include:
- Anheuser-Busch Companies, LLC
- The Coca-Cola Company (KO)
- Dow Chemical Company (DOW)
- Eastman Kodak Company (KODK)
- Eli Lilly and Company (LLY)
- General Electric Company (GE)
- IBM (IBM)
- Johnson & Johnson (JNJ)
- McDonald's (MCD)
- PepsiCo, Inc. (PEP)
- Pfizer, Inc. (PFE)
- Philip Morris International (PM)
- Polaroid Corp.
- The Procter & Gamble Company (PG)
- Revlon, Inc. (REV)
- Stanley Black & Decker, Inc. (SWK)
- Texas Instruments, Inc. (TXN)
- The Walt Disney Company (DIS)
- Walmart, Inc. (WMT)
- Xerox Corp. (XRX)
In February 2008, Wall Street giant, UBS, devised the New Nifty 50, an expanded version of the list that included international companies like Toyota Motor Corporation (TM) and Samsung Group. The inclusion of international companies on the New Nifty 50 allowed investors to take advantage of the solid returns and stability of companies in the U.K., Japan, and some emerging markets.
The Other Nifty 50
Today, the Nifty 50 has meaning in the investment world beyond the popular large-cap NYSE stocks of the 1960s and 1970s. It's also the name of a stock index on the National Stock Exchange of India that was launched in April 1996 and is owned and managed by NSE Indices Limited.
In India, the NIFTY 50 is an index of 50 stocks that are diversified across 13 sectors of the nation's economy: financial services, energy, information technology, consumer goods, automobiles, metals, construction, pharmaceuticals, cement and cement products, telecommunications, fertilizers and pesticides, media and entertainment, and services.
NSE Indices Limited also offers several other stock indexes with "NIFTY" in the name that are related to NIFTY 50. They include:
- Other broad-based indexes (NIFTY 100, NIFTY Mid-Cap 50, NIFTY Small Cap 50, etc.)
- Sector-based indexes (NIFTY Auto, NIFTY Media, NIFTY Pharma, NIFTY Realty, etc.)
- Theme-based indexes (NIFTY Commodities, NIFTY Infrastructure, NIFTY Mid-Cap Liquid 15, etc.)
- Strategy-based indexes (NIFTY 50 Arbitrage, NIFTY 50 Dividend Points, NIFTY High Beta 50, etc.)