As the name suggests, the Nifty Next 50 sits just outside the Nifty 50, which may create confusion about whether it is a mid cap or large cap index. Since the index tracks companies ranked between 51 and 100 by market capitalisation, it is classified as a large cap index under SEBI categorisation rules.
What is the Nifty Next 50 index?
The Nifty Next 50 is a stock market index that tracks the 51st to 100th largest companies listed on the National Stock Exchange (NSE). These rankings are based on market capitalisation. The index is also sometimes referred to as a “feeder index” to the Nifty 50 because it includes companies positioned just below the top 50, some of which may move into the Nifty 50 over time depending on market performance and index rebalancing.
How does SEBI classify large cap and mid cap stocks in India?
According to SEBI categorisation guidelines, the top 100 companies by full market capitalisation are classified as large cap companies. This places the Nifty Next 50 within the large cap category. Companies ranked between 101 and 250 are classified as mid cap, while companies beyond the 250th rank fall under the small cap category. AMFI reviews these classifications periodically, generally every six months.
These categories are important because different market-cap segments may carry different levels of volatility and market risk:
- Large cap companies are generally considered relatively more stable compared with smaller companies and may offer moderate return potential.
- Mid cap companies may involve relatively higher volatility and market risk.
- Small cap companies can experience very high volatility and higher market risk.
Why is Nifty Next 50 officially a large cap index?
The Nifty Next 50 tracks companies ranked between 51 and 100 by market capitalisation. Since SEBI classifies the top 100 companies as large cap, the Nifty Next 50 is officially considered a large cap index.
The index comprises established companies that may continue to grow over time depending on business and market conditions. Because these companies are positioned just below the Nifty 50, the index is often viewed as a bridge between mature blue-chip companies and relatively faster-growing large cap businesses.
Nifty 50 vs Nifty Next 50: Key differences
Although both indices track large cap companies, there are some important differences investors should understand:
| Key difference | Nifty 50 | Nifty Next 50 |
| Market cap rank | 1–50 | 51–100 |
| Volatility | Relatively lower | Relatively higher |
| Company profile | More established large cap companies | Emerging large cap companies |
| Liquidity | Higher | Relatively lower |
| Market behaviour | Generally more stable | May experience relatively higher volatility |
| Index fund availability | Widely available | Available |
While the Nifty 50 includes some of the most liquid and widely traded large cap stocks in India, the Nifty Next 50 includes the next set of large companies that may still be expanding their businesses.
Historically, the Nifty Next 50 has experienced relatively higher volatility compared with the Nifty 50, and performance has varied across market cycles. Investors should evaluate suitability based on financial goals, investment horizon and risk appetite.
Why does the Nifty Next 50 sometimes behave like a mid cap index?
Although the Nifty Next 50 is officially classified as a large cap index, it may display some characteristics commonly associated with mid cap stocks, such as relatively higher volatility and stronger reactions to economic cycles.
This is because the companies tracked by the index are generally smaller than Nifty 50 companies and may still be expanding their businesses. As a result, they can sometimes be more sensitive to changes in economic conditions, liquidity and investor sentiment compared with larger and more established companies in the Nifty 50.
Companies that grow significantly over time may move into the Nifty 50 during periodic index rebalancing, while some companies moving out of the Nifty 50 may enter the Nifty Next 50. This movement can make the index appear more dynamic compared with the Nifty 50.
Who may consider the Nifty Next 50 index?
The Nifty Next 50 may be considered by investors with a medium-to-high risk appetite and a longer investment horizon, such as seven to ten years. Investors seeking relatively lower volatility may consider broader large cap exposure first, depending on their financial goals, asset allocation and risk profile.
Conclusion
The Nifty Next 50 is classified as a large cap index under SEBI categorisation rules. The confusion around whether it is a “large cap or mid cap” index usually arises because it may display certain characteristics associated with relatively higher-volatility market segments. This is because the companies within the Nifty Next 50 are relatively smaller compared with the Nifty 50 and may be more sensitive to market cycles. However, under SEBI classification norms, the index remains part of the large cap category.
FAQs
Is the Nifty Next 50 the same as the Nifty Midcap index?
No. The Nifty Next 50 tracks companies ranked between 51 and 100 by market capitalisation and is classified as a large cap index under SEBI guidelines. Mid cap indices generally track companies ranked between 101 and 250.
What stocks are included in the Nifty Next 50?
The Nifty Next 50 includes large cap companies ranked between 51 and 100 by market capitalisation on the NSE. The list of companies may change periodically based on NSE index methodology and rebalancing.
Is Nifty Next 50 a suitable investment?
The suitability of the Nifty Next 50 depends on factors such as an investor’s financial goals, investment horizon and ability to manage market volatility.
What is the return of Nifty Next 50 over 10 years?
The 10-year return of the Nifty Next 50 changes over time based on market performance and the period considered. Investors should refer to the latest NSE factsheet or index data for updated performance figures. Past performance may or may not be sustained in future.
Is Nifty Next 50 more volatile than the Nifty 50?
Yes. The Nifty Next 50 has historically experienced relatively higher volatility compared with the Nifty 50 because its companies may be more sensitive to market cycles and economic conditions.
Can I invest in the Nifty Next 50 through SIP?
Yes. Several AMCs offer index funds and ETFs benchmarked to the Nifty Next 50, and investors can invest in these through SIPs, subject to scheme availability and platform options.
