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! 🙂

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