This post is in continuation of my earlier post, wherein the primary reason was given as to why Index funds are being suggested for investment. Well, now the time has come to explain to why it is not the safest way, but the following is one of factors which has to be taken into consideration before investing.
https://swakaarya.com/2018/12/05/investing-and-the-story-of-the-bundle-of-sticks/
Take for example, Nifty 50 Index, which is a combination of 50 stocks, the link to the website is given below:
https://www1.nseindia.com/live_market/dynaContent/live_watch/equities_stock_watch.htm?cat=N
I have taken this data at about 13.20 hrs approximately today i.e.15.07.2020 from the above website and I have rearranged the stocks in ascending order as per its traded value. This data is to just show the weightage of the individual 50 stocks in the basket of Nifty 50 Index, and I have calculated the percentage of individual stocks which form the index of Nifty 50.
Symbol |
Open |
High |
Low |
Last Traded Price |
Change |
%Change |
Traded Vol(lacs) |
Traded Value(crs) |
% to the Nifty 50 |
NIFTY 50 |
10,701.00 |
10,827.45 |
10,683.45 |
10,804.05 |
196.7 |
1.85 |
4,646.49 |
24,633.81 |
100.00 |
RELIANCE |
1,937.95 |
1,978.80 |
1,935.00 |
1,958.60 |
41.6 |
2.17 |
231.78 |
4,526.48 |
18.38 |
WIPRO |
236 |
268.7 |
235 |
261.95 |
36.95 |
16.42 |
1,009.80 |
2,588.71 |
10.51 |
BAJFINANCE |
3,230.00 |
3,297.70 |
3,225.40 |
3,274.00 |
83.05 |
2.6 |
68.69 |
2,241.88 |
9.10 |
INFY |
799 |
848.45 |
794.8 |
832.85 |
49.6 |
6.33 |
230.05 |
1,906.09 |
7.74 |
AXISBANK |
424 |
443.4 |
423.6 |
442.25 |
24.55 |
5.88 |
271.69 |
1,181.52 |
4.80 |
TCS |
2,185.00 |
2,260.00 |
2,181.10 |
2,234.90 |
62.95 |
2.9 |
43.56 |
970.06 |
3.94 |
HDFCBANK |
1,070.20 |
1,079.00 |
1,062.00 |
1,073.45 |
14.6 |
1.38 |
70.41 |
753.76 |
3.06 |
SBIN |
187.95 |
189.95 |
185.6 |
187.25 |
1.2 |
0.64 |
388.71 |
731.13 |
2.97 |
ICICIBANK |
349.5 |
356.8 |
347.95 |
353.3 |
7.75 |
2.24 |
204.29 |
720.64 |
2.93 |
INDUSINDBK |
517.85 |
527.8 |
514.2 |
521 |
10.2 |
2 |
134.37 |
701.75 |
2.85 |
BHARTIARTL |
588.95 |
588.95 |
575.4 |
579.1 |
-10.25 |
-1.74 |
98.76 |
573.99 |
2.33 |
TECHM |
604 |
630 |
602 |
617.2 |
18.9 |
3.16 |
90.91 |
565.3 |
2.29 |
MARUTI |
5,810.00 |
5,879.80 |
5,755.00 |
5,845.00 |
73.25 |
1.27 |
8.81 |
513.03 |
2.08 |
HCLTECH |
593.65 |
627.95 |
592.5 |
618.2 |
26.85 |
4.54 |
70.15 |
432.55 |
1.76 |
HDFC |
1,809.00 |
1,821.90 |
1,792.35 |
1,811.55 |
19.95 |
1.11 |
21.86 |
395.47 |
1.61 |
BAJAJFINSV |
6,320.00 |
6,439.85 |
6,277.35 |
6,384.90 |
141.45 |
2.27 |
6.09 |
387.43 |
1.57 |
EICHERMOT |
19,010.00 |
19,199.00 |
18,525.00 |
18,600.00 |
-250.15 |
-1.33 |
1.88 |
352.66 |
1.43 |
KOTAKBANK |
1,306.40 |
1,311.95 |
1,285.00 |
1,300.55 |
2.25 |
0.17 |
25.93 |
337.09 |
1.37 |
TATAMOTORS |
106.8 |
106.8 |
103.55 |
104.6 |
-0.55 |
-0.52 |
314.89 |
332.34 |
1.35 |
HINDUNILVR |
2,237.25 |
2,282.00 |
2,235.05 |
2,275.50 |
40.75 |
1.82 |
13.8 |
312.32 |
1.27 |
DRREDDY |
3,989.00 |
4,045.00 |
3,961.00 |
4,035.00 |
51.85 |
1.3 |
7.35 |
294.52 |
1.20 |
ITC |
196.35 |
198.5 |
194.5 |
198 |
2.1 |
1.07 |
134.19 |
264.38 |
1.07 |
ZEEL |
168 |
168.8 |
161.1 |
162.2 |
-4.1 |
-2.47 |
159.55 |
262.99 |
1.07 |
TATASTEEL |
340.65 |
346.5 |
340.35 |
343.25 |
6.6 |
1.96 |
70.66 |
243.14 |
0.99 |
LT |
918.05 |
925 |
911 |
914.7 |
1.8 |
0.2 |
22.78 |
209.14 |
0.85 |
M&M |
550 |
556.8 |
542.75 |
555.6 |
10.4 |
1.91 |
35.27 |
193.19 |
0.78 |
CIPLA |
634.4 |
642.4 |
633.1 |
640.25 |
7.95 |
1.26 |
28.48 |
181.54 |
0.74 |
HEROMOTOCO |
2,606.15 |
2,670.00 |
2,606.15 |
2,668.05 |
56.2 |
2.15 |
6.65 |
175.69 |
0.71 |
BAJAJ-AUTO |
2,915.00 |
2,948.00 |
2,900.00 |
2,944.05 |
44.55 |
1.54 |
5.81 |
169.48 |
0.69 |
NESTLEIND |
16,940.00 |
17,143.00 |
16,740.00 |
16,870.40 |
-25.4 |
-0.15 |
0.95 |
160.27 |
0.65 |
SUNPHARMA |
494.2 |
499.4 |
492.2 |
497.9 |
5.8 |
1.18 |
30.59 |
151.53 |
0.62 |
ASIANPAINT |
1,700.00 |
1,713.60 |
1,675.50 |
1,685.80 |
-2.6 |
-0.15 |
8.93 |
150.97 |
0.61 |
JSWSTEEL |
196 |
199.85 |
194.75 |
198 |
3.95 |
2.04 |
75.74 |
149.94 |
0.61 |
TITAN |
979 |
985.8 |
970.25 |
972.2 |
-1.6 |
-0.16 |
14.91 |
145.67 |
0.59 |
BPCL |
377.85 |
382.35 |
371.2 |
372.45 |
-1.3 |
-0.35 |
36.01 |
135.27 |
0.55 |
HINDALCO |
166.35 |
168.5 |
164.8 |
166.9 |
3.1 |
1.89 |
78.01 |
130.25 |
0.53 |
UPL |
441.75 |
442.85 |
430.45 |
441.25 |
3.75 |
0.86 |
27.43 |
119.92 |
0.49 |
BRITANNIA |
3,742.00 |
3,778.30 |
3,721.10 |
3,740.00 |
4.75 |
0.13 |
3.07 |
115.06 |
0.47 |
VEDL |
108.9 |
110.65 |
108.35 |
108.95 |
0.05 |
0.05 |
87.25 |
95.35 |
0.39 |
IOC |
86.8 |
87 |
85.2 |
86.2 |
-0.2 |
-0.23 |
107.77 |
92.59 |
0.38 |
POWERGRID |
165.05 |
166.3 |
163.6 |
165.4 |
2.05 |
1.25 |
52.26 |
86.29 |
0.35 |
ONGC |
78 |
78.2 |
77.15 |
77.65 |
0.3 |
0.39 |
101.85 |
78.98 |
0.32 |
INFRATEL |
211 |
212.4 |
207.35 |
209.4 |
0.6 |
0.29 |
36.91 |
77.21 |
0.31 |
NTPC |
88.3 |
89.75 |
88.05 |
89.45 |
1.8 |
2.05 |
77.97 |
69.27 |
0.28 |
ADANIPORTS |
320.55 |
324.5 |
319 |
320.8 |
0.4 |
0.12 |
20.85 |
67.07 |
0.27 |
SHREECEM |
22,101.00 |
22,274.00 |
21,810.00 |
21,855.20 |
-230.55 |
-1.04 |
0.29 |
64.27 |
0.26 |
GRASIM |
602.45 |
607 |
595.1 |
596.9 |
0.2 |
0.03 |
10.25 |
61.6 |
0.25 |
GAIL |
99.5 |
99.9 |
97.55 |
98.15 |
-0.9 |
-0.91 |
58.31 |
57.57 |
0.23 |
ULTRACEMCO |
3,782.20 |
3,815.00 |
3,772.00 |
3,808.20 |
37.3 |
0.99 |
1.5 |
56.94 |
0.23 |
COALINDIA |
128.85 |
129.45 |
128.2 |
128.65 |
0.4 |
0.31 |
38.47 |
49.52 |
0.20 |
From the above data, one could find that only one stock is about 18% of the whole basket of 50 stocks. For small investors, it is not advisable to have a concentrated investment in a single stock. This will have a significant impact on Nifty 50 based on the price movement of that particular stock alone, which is quite risky for longterm. Therefore, it is always advisable to have this important fact in mind, for those investors who invest only in this index of Nifty 50 during this period of time.
Best wishes for a Happy & Rich future! 🙂
Swakaarya 