Nifty 500 and How it is Calculated

The Nifty 500 is a broad-market index that tracks 500 companies selected from the eligible National Stock Exchange (NSE) universe. Its selection process considers full market capitalisation, trading activity and other eligibility requirements.

The index includes large cap, mid cap and small cap companies. However, they do not have equal weights. Companies with a higher free-float market capitalisation have a greater influence on index movements. Owing to this wide coverage, the Nifty 500 Index is commonly used to assess broad Indian equity market performance and benchmark diversified equity portfolios.

What is the Nifty 500 Index?

Companies in the Nifty 500 are selected using full market capitalisation, average daily turnover and other eligibility requirements. Once selected, their index weights are determined by free-float market capitalisation, which considers the value of shares readily available for public trading.

This means the index does not assign equal weight to all 500 companies. Companies with a higher publicly tradable market value have a greater influence on its movements.

As of March 30, 2026, the Nifty 500 represented approximately 92.04% of the free-float market capitalisation of stocks listed on the NSE. Its constituents also accounted for approximately 84.07% of the traded value of all NSE stocks during the six months ending March 2026.

Large cap companies

Large cap companies form a substantial part of the Nifty 500 Index. These are generally established businesses with relatively large market capitalisations. Since the index is weighted by free-float market capitalisation, large cap stocks tend to have a greater influence on its movements.

Mid cap companies

Mid cap companies represent the market-cap segment below large cap companies. These businesses may be at an expansion stage and may offer potential growth opportunities. However, their share prices can experience greater fluctuations than those of established large cap companies.

Small cap companies

Small cap companies extend the index’s coverage beyond the large cap and mid cap segments. They generally have lower market capitalisations and can experience greater volatility and liquidity risk than larger companies.

The actual weight of each market-cap segment can change as share prices, free float and index constituents change.

Why choose the Nifty 500 Index?

Representation – Includes companies across multiple sectors

Growth – Chance to capture opportunities across the market.

Breadth – Offers exposure to a wide section of the equity market across market capitalisations.

Diversification – Combines large cap, mid cap, and small cap stocks within a single index structure.

How is the Nifty 500 calculated?

The Nifty 500 Index is calculated using the free-float market capitalisation method. Free-float market capitalisation considers only the shares readily available for public trading. Shares held by promoters, strategic investors and certain other locked-in shareholders are generally excluded.

The simplified formula is:

Index value = (Current free-float market capitalisation / Base market capitalisation) x Base index value

The index has a base date of January 1, 1995, and a base value of 1,000. A company with a higher free-float market capitalisation receives a greater weight and therefore has more influence on index movements.

It is important to distinguish between selection and weighting. Full market capitalisation is an important criterion for selecting companies, while free-float market capitalisation determines their index weights.

Why choose the Nifty 500 Index?

The Nifty 500 has several features that make it a widely used broad-market index:

• Wide market coverage: The index represents a large portion of the free-float market capitalisation of stocks listed on the NSE.
• Exposure across market caps: It includes large cap, mid cap and small cap companies within one index.
• Sector diversification: Its constituents operate across financial services, capital goods, healthcare, automobiles, energy, information technology and several other sectors.
• Rules-based construction: Companies are selected and weighted using a defined methodology, making the index transparent and measurable.
• Broad-market benchmark: Fund managers, analysts and investors can use the index to compare the performance of diversified equity portfolios.
• Passive investment routes: Index funds and ETFs may provide exposure to the Nifty 500 by seeking to track its performance, subject to tracking error, scheme expenses and market risk.

This diversification spreads exposure across companies, sectors and market-cap segments. However, it does not remove equity market risk.

Nifty 500 companies

As of June 30, 2026, the Nifty 500 had 500 constituents operating across sectors such as financial services, capital goods, healthcare, automobiles, energy and information technology.

The top 10 constituents by index weight were:

Company name	Weight (%)
HDFC Bank Ltd.	6.24
ICICI Bank Ltd.	5.03
Reliance Industries Ltd.	4.46
Bharti Airtel Ltd.	2.87
Larsen & Toubro Ltd.	2.48
State Bank of India	2.17
Axis Bank Ltd.	1.97
Infosys Ltd.	1.79
Kotak Mahindra Bank Ltd.	1.47
ITC Ltd.	1.41

Source: NSE Indices Nifty 500 Factsheet dated June 30, 2026; constituent weights may change over time.

Please note that the reference to any industry, sector or stock is provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector

Sector representation of the Nifty 500

The Nifty 500 includes companies from 20 sectors, providing exposure to different parts of the economy. However, sector weights are not equal. Since the index uses free-float market capitalisation, sectors containing companies with higher publicly tradable market values receive greater weights.

As of June 30, 2026, financial services had the highest weight at 31.58%. Capital goods, healthcare, automobiles and energy were among the other sectors with relatively large weights.

Sector	Weight (%)
Financial Services	31.58
Capital Goods	7.43
Healthcare	7.19
Automobile and Auto Components	7.15
Oil, Gas & Consumable Fuels	7.08
Information Technology	5.65
Fast Moving Consumer Goods	5.53
Metals & Mining	3.97
Consumer Services	3.8
Telecommunication	3.69
Power	3.66
Construction	2.94
Consumer Durables	2.78
Services	2.07
Chemicals	2.02
Construction Materials	1.92
Realty	1.06
Textiles	0.27
Media, Entertainment & Publication	0.13
Diversified	0.09

The sector composition shows that broad market coverage does not necessarily mean equal diversification across sectors. Changes in heavily weighted sectors, particularly financial services, can have a greater effect on the index. Sector weights may change as share prices, free float and index constituents change.

Source: NSE Indices Nifty 500 Factsheet dated June 30, 2026; sector weights are subject to change.

Please note that the reference to any industry, sector or stock is provided for illustrative purposes only. This should not be construed as a research report or a recommendation to buy or sell any security or sector.

Historical returns of the Nifty 500

Historical returns show how the Nifty 500 performed over different periods. The Price Return Index reflects changes in constituent share prices, while the Total Return Index also accounts for dividends assumed to be reinvested.

The following returns are as of June 30, 2026:

Index returns (%)	QTD	YTD	1 year	5 years	Since inception
Price Return Index	12.02	-3.67	-2.63	11.28	10.46
Total Return Index	12.4	-3.2	-1.71	12.41	12.13

The quarterly, year-to-date and one-year figures are absolute returns. The five-year and since-inception figures are compound annual growth rates.

The data also shows why the selected period and index variant matter when assessing historical returns. The Total Return Index produced higher figures because it includes the effect of reinvested dividends. However, these returns relate only to the periods shown and do not indicate how the Nifty 500 may perform in the future.

Source: NSE Indices Nifty 500 Factsheet dated June 30, 2026.

Past performance may or may not be sustained in the future.

Risks and limitations of Nifty 500

There are also some limitations of the Nifty 500 that investors may consider:

● Market risk
The Nifty 500 is an equity index and is subject to market fluctuations. Its value can rise or fall depending on economic conditions, corporate earnings, interest rates, global cues and investor sentiment.

● Large-cap tilt
Although the index includes large cap, mid cap and small cap companies, large cap stocks account for a major portion of the index weight. As a result, the index movement may be influenced more by large companies than by mid or small cap stocks.

● Exposure to mid and small cap volatility
The index includes mid cap and small cap companies, which may offer long-term growth potential but can also be more volatile than established large cap companies.

● Concentration by weight
The Nifty 500 is weighted by free-float market capitalisation. This means companies with higher free-float market value have a larger impact on index performance, even though the index includes 500 companies.

Nifty 500 vs Nifty 50

The Nifty 500 and Nifty 50 are both Indian equity market indices, but they represent different parts of the market:

Parameter	Nifty 500	Nifty 50
Composition	Tracks 500 companies selected from the eligible NSE universe	Tracks 50 large and liquid companies listed on the NSE
Market coverage	Includes large cap, mid cap and small cap companies	Primarily represents large cap companies
Weighting method	Free-float market capitalisation	Free-float market capitalisation
Diversification	Spreads exposure across more companies and market-cap segments	Provides diversification within the large cap segment
Market behaviour	Can be affected by volatility in mid cap and small cap stocks	Its movements primarily reflect changes in its large cap constituents
Common use	Broad-market benchmark for diversified equity portfolios	Benchmark for large cap equity performance

Neither index is automatically more suitable than the other. The relevant choice depends on the section of the equity market an investor wants to track, along with their investment objective and risk appetite.

How to invest in the Nifty 500?

The Nifty 500 is a market index and cannot be purchased directly. Investors seeking exposure to its performance may consider the following routes:

• Nifty 500 index funds: These mutual fund schemes aim to hold the index constituents in broadly the same proportions and replicate its performance, subject to tracking error and scheme expenses.
• Nifty 500 ETFs: These funds also aim to track the index but are bought and sold on a stock exchange. Investors generally need a demat and trading account to transact in ETF units.
• Direct stock portfolio: An investor could construct a portfolio using the index constituents in similar proportions. However, buying and regularly rebalancing hundreds of stocks can be complex and may involve significant transaction and monitoring requirements.

An actively managed mutual fund that uses the Nifty 500 as its benchmark is different from a Nifty 500 index fund. Its portfolio may differ considerably from the index because the fund manager selects securities according to the scheme’s investment strategy.

Stocks vs mutual funds

Before choosing between stocks or mutual funds for Nifty 500 investments, it may be beneficial to closely look at the differences between the two. The suitable route depends on the investor’s knowledge, time, risk appetite and ability to manage the portfolio.

Parameter	Stocks	Mutual funds
Meaning	Stocks represent direct ownership in a company.	Mutual funds pool money from multiple investors and invest in a basket of securities such as stocks, bonds or other assets
Investment control	Investors choose individual stocks based on their own research and preferences	Fund managers make investment decisions based on the scheme’s objective
Diversification	Depends on how many stocks an investor buys and how the portfolio is allocated	Mutual funds offer built-in diversification across multiple securities
Risk	Can be higher if the investor holds only a few stocks or does not diversify adequately	May be reduced through diversification. However, returns remain subject to market risk and conditions
Research and monitoring	Requires regular research, tracking of company performance, market conditions and portfolio changes	Requires comparatively less active monitoring, as the fund is professionally managed.
Cost	May involve brokerage, demat charges and transaction costs	May involve expense ratio, exit load and other scheme-related charges
Suitability	May suit investors who have the knowledge, time and risk appetite to select and monitor individual stocks	May suit investors who prefer a more structured and professionally managed investment route

Eligibility criteria for inclusion in the Nifty 500 Index

The Nifty 500 follows defined rules for selecting, including and excluding constituent companies. The main eligibility and selection requirements include:

• The security must be an eligible equity share traded on the NSE.
• The company should rank within the top 800 based on both average daily turnover and average daily full market capitalisation during the previous six months.
• The stock must have traded on at least 90% of the trading days during the previous six months.
• A newly listed company should generally have a minimum listing history of one month as of the cut-off date.
• Convertible securities, bonds, warrants, rights and preference shares that provide a guaranteed fixed return are not eligible.

An eligible security may be included if:

• Its full market capitalisation rank is within the top 350; or
• Its full market capitalisation is at least 1.5 times that of the smallest existing Nifty 500 constituent.

An existing security may be excluded if its full market capitalisation or average turnover rank falls below 800 or it no longer meets the applicable eligibility requirements.

The Nifty 500 is reviewed semi-annually. The cut-off dates are January 31 and July 31, and the review considers data from the preceding six months. NSE Indices generally provides four weeks’ notice before scheduled changes take effect.

Source: NSE Indices Nifty 500 Factsheet dated June 30, 2026.

Significance of the Nifty 500 Index in financial markets

The Nifty 500 index is commonly used as a broad market indicator. Asset managers, analysts, and researchers often refer to it to assess overall equity market trends. Since it represents a large share of India’s listed market capitalisation, movements in the index may reflect changes in investor sentiment, economic conditions, and sectoral performance.

Conclusion

The Nifty 500 provides a broad view of the Indian equity market by bringing together 500 companies across market-cap segments and sectors. However, its free-float weighting means larger publicly traded companies have more influence on its movements. Investors considering Nifty 500 index funds or ETFs may evaluate factors such as tracking error, costs, investment horizon and equity-market risk before deciding whether such exposure suits their financial goals.

FAQs on Nifty 500

What does Nifty 500 mean?

The Nifty 500 is a broad-market equity index that tracks 500 companies selected from the eligible NSE universe. It includes large cap, mid cap and small cap companies, with constituent weights based on free-float market capitalisation.

Which index is better — Nifty 50 or Nifty 500?

Neither index is universally more suitable. The Nifty 50 focuses on leading large cap companies, while the Nifty 500 provides wider market coverage by including large cap, mid cap and small cap companies.

Is it possible to invest in the Nifty 500 index?

The index cannot be purchased directly. Investors may seek exposure through index funds or ETFs that track the Nifty 500, subject to tracking error, scheme expenses and market risk.

How does Sensex differ from the Nifty 500 index?

The Sensex tracks 30 large and established companies listed on the BSE. The Nifty 500 tracks 500 companies selected from the eligible NSE universe and covers large cap, mid cap and small cap segments.

What is the difference between Nifty 100 and Nifty 500?

The Nifty 100 represents 100 large cap companies, while the Nifty 500 covers 500 companies across the large cap, mid cap and small cap segments. The Nifty 500 therefore represents a wider section of the equity market.

What are the Nifty 500 companies?

Nifty 500 companies are those selected under the NSE Indices methodology. They operate across sectors such as financial services, healthcare, technology, automobiles, energy and capital goods. The constituent list may change following index reviews and corporate events.

Which companies are eligible for the Nifty 500?

Companies must meet NSE Indices requirements relating to listing, full market capitalisation, turnover, trading frequency and other eligibility conditions. Eligible securities are then assessed under the index’s inclusion and exclusion rules.

How often is the Nifty 500 updated?

The Nifty 500 is reviewed semi-annually using six-month data ending in January and July. Scheduled changes are generally announced in advance. The index may also change following corporate events, suspensions or delistings.

Is it good to invest in Nifty 500?

Whether Nifty 500 exposure is suitable depends on the investor’s objectives, time horizon and risk appetite. It offers broad equity exposure but remains subject to market risk, including volatility arising from its mid cap and small cap constituents.