List of Nifty 50 ETFs in India

What are Nifty 50 ETFs?

A Nifty 50 ETF is a market-linked investment that replicates the performance of the Nifty 50 Index. This index comprises 50 of the largest and most liquid stocks listed on the National Stock Exchange (NSE). When you invest in a Nifty Index ETF, you gain indirect ownership of these top companies, mirroring the index’s returns. Unlike actively managed funds, Nifty 50 ETFs simply track the index and are passively managed, making them a low-cost investment option.

Apart from the Nifty 50 Index ETF, investors also have options like the Nifty Next 50 ETF, which includes companies ranked 51-100 by market capitalisation, offering exposure to emerging large-cap stocks.

Benefits of Investing in Nifty 50 ETFs

Investing in Nifty 50 ETFs offers several advantages:

1. Diversification: A Nifty 50 ETF fund includes stocks from various sectors, reducing the risk associated with investing in individual stocks.
2. Lower Costs: Since Nifty Index ETFs are passively managed, they have lower expense ratios compared to actively managed mutual funds.
3. Liquidity: Being traded on the stock exchange, ETFs provide high liquidity, allowing investors to buy and sell units at market prices during trading hours.
4. Transparency: ETF holdings closely mirror the Nifty 50 Index, ensuring transparency in asset allocation.
5. Market Exposure: Best Nifty 50 ETFs enable investors to participate in the growth of India’s leading blue-chip companies.

Risks Associated with Investing in Nifty 50 ETFs

While Nifty 50 ETFs offer numerous advantages, they are not without risks:

1. Market Risk: The performance of a Nifty 50 ETF fund is directly linked to the stock market, meaning investors may face volatility and potential losses.
2. Tracking Error: Although ETFs aim to replicate the Nifty 50 Index, slight deviations (tracking error) can occur due to fund expenses and market fluctuations.
3. Liquidity Risk: While ETFs are liquid, certain funds may experience lower trading volumes, impacting price efficiency.
4. Sectoral Impact: The Nifty 50 Index ETF is heavily weighted in sectors like banking, IT, and energy. Any downturn in these sectors could impact the ETF’s performance.

How to Invest in ETFs in India?

Investing in Nifty 50 ETFs in India is straightforward:

1. Open a Demat Account: Since ETFs trade on the stock exchange, a Demat account with a registered broker is necessary.
2. Choose the Right ETF: Investors can use the Tickertape Stock Screener and analyse the Nifty 50 ETF list to identify the best ETF based on expense ratio, liquidity, and tracking error.
3. Place an Order: ETFs can be bought and sold like regular stocks during market hours.
4. Monitor Performance: Investors should track the Nifty 50 ETF price and make investment decisions based on market conditions and financial goals.

You can also invest in a basket consisting of ETFs via smallcase. Simply go to smallcase.com or the smallcase app, and login via your phone number. Then, go to ‘Discover‘ and enter ‘Nifty ETF’ in the search bar and hit enter. You’ll find an array of portfolios that have Nifty ETFs as a constituent. Just pick the one that fits your investment thesis and click on ‘Invest Now’.

Who Should Explore Nifty 50 ETFs?

Nifty 50 ETFs are suitable for:

• Long-Term Investors: Those looking for stable and long-term wealth creation.
• Passive Investors: Investors who prefer a hands-off approach and want market-linked returns.
• Beginners: New investors seeking diversification and exposure to top Indian companies.
• Cost-Conscious Investors: Individuals looking for low-cost investment options compared to mutual funds.

Note: However, investing in any stock is subject to market risk, and investors should do their own research before investing.

Taxation on Nifty 50 ETFs

Here’s the taxation on capital gains of equity ETFs

• Short-Term Capital Gains (STCG): Gains from selling ETFs within one year are taxed at 15%.
• Long-Term Capital Gains (LTCG): Gains above ₹1 lakh after one year are taxed at 10% without indexation benefits.
• Dividend Taxation: Dividends received from ETFs are taxable as per the investor’s income tax slab.

Factors to Consider Before Investing in Nifty 50 ETFs

Before investing in Nifty 50 Index ETFs, consider the following factors:

1. Expense Ratio: Lower expense ratios ensure higher returns in the long run.
2. Tracking Error: Choose ETFs with minimal tracking errors to closely mirror the Nifty 50 Index.
3. Liquidity: Higher trading volumes ensure ease of buying and selling.
4. Fund Performance: Analyse past performance and NAV trends before investing.
5. Investment Goals: Align investments with financial objectives and risk appetite.

To Wrap Up

Nifty 50 ETFs provide an excellent opportunity for investors to gain exposure to India’s top 50 companies in a cost-effective and diversified manner. While they offer benefits like transparency, liquidity, and lower costs, investors should also be mindful of risks such as market volatility and tracking errors. By carefully evaluating factors like expense ratios, liquidity, and long-term investment goals, investors can make informed decisions and potentially reap significant returns from Nifty 50 ETFs.

If you’re considering investing in ETFs, analysing the Nifty 50 ETF list and monitoring the Nifty 50 ETF price can help you make better investment choices. With proper research and strategy, Nifty 50 ETFs can be a valuable addition to your portfolio.