• HDFC securities
• 07 Oct 2023
• Knowledge Centre

Whenever we think about index fund investing, our choices often revolve around two popular indices: The Sensex and Nifty 50. While these benchmarks have claimed attention for all the right reasons, there also exists a lesser-known benchmark: The Nifty Total Market Index. And here’s why you should know about it:

 

The Nifty Total Market Index tracks the performance of 750 companies listed on the National Stock Exchange. These companies range across large-cap, small-cap, mid-cap and micro-cap segments. All stocks listed on the Nifty 500 and Nifty microcap 250 index are a part of this index. The weightage of these stocks is calculated on the basis of their free-float market capitalisation.

 

(For the uninitiated, the free-float market cap method only considers publicly held shares of the company. This means, that the shares held by promoters, trusts and the government are excluded)

 

Also, did you know? The Nifty Total Market Index, with its exposure to all 22 sectors, covers more than 96% of India’s listed market! This means, investing in this index gives you exposure to the entire Indian stock market, leaving no sector disregarded.

 

Now let’s find out some key elements of the Nifty Total Market Index.

Key Features of the Nifty Total Market Index

1. Gives a Broad-Sector Coverage (>96%):

 

With 750 listed companies across 22 sectors, the Nifty Total Market Index covers more than 96% of the Indian Stock Market. Not just that, these companies are fairly distributed between, small, mid and large-cap segments. This means that investing in the index gives you the healthy stability of large-cap stocks and the growth potential of small, mid and micro-cap stocks.

 

2. Provides Sectoral Diversification:

 

While the Nifty 50 index covers only 14 sectors, the Nifty Total Market Index has exposure to all 22 sectors of India’s listed market. Some major ones include Financial Services, IT, Oil and Gas, FMCG, Automobile and Healthcare. This can help you mitigate the sector-specific risks. Hence, if a sector doesn't perform well in a particular quarter, other well-performing sectors can balance out your returns.

 

3. Semi-Annual Rebalancing

 

The Nifty Total Market Index is rebalanced twice a year: In March and in September.

 

Hence, during this time, if any changes are made in the Nifty 500 or Nifty Micro Cap 250 Index, the Nifty Total Market index will also reflect the same.

 

4. Competitive Market Performance

 

Since its inception, the Nifty Total Market index has provided an annual return of 13.06%. It has also outperformed the Nifty 50, which only gave 11.25% returns.

 

5. Index acts as a Market Representative

 

The Nifty Total Market index provides a panoramic view of almost the entire Indian stock market; 96% to be specific. The returns of this index are based on the performance of the two indices: Nifty 500 and Nifty Microcap 250. Hence, it is safe to say that this index is a holistic representative of the entire Indian Stock Market.

Sectoral Percentage

 

Now, let’s look at the sector-wise percentage of industries in the Nifty Total Market Index:

 

Sector	Weightage (%)
Financial Services	30.14
Information Technology	10.07
Oil, Gas & Consumable Fuels	8.18
Fast Moving Consumer Goods	8.02
Automobile and Auto Components	6.29
Healthcare	5.59
Capital Goods	5.32
Consumer Durables	3.64
Metals & Mining	3.35
Construction	3.21
Others (chemicals, realty, textiles, etc)	16.18

 

*Data as on 30th Sept 2023

Source: NSE Official Website

Historical Returns

Here’s how the Nifty Total Market Index has performed over the years, since its inception:

 

Particulars (TR Index)	Index Returns (%)
1 year	18.45
3 years	24.71
5 years	15.13
10 years	16.33
15 years	13.79
Since Inception	14.61

 

*Data as on 30th Sept 2023

Source: NSE Fact Sheet

 

Wrapping Up

To sum it up, the Nifty Total Market Index is a smart choice for many investors. It works well especially if you want an easy way to invest, plan for the long term, or just keep an eye on the market. So, if you are exploring investing in some index funds, don’t forget to keep the Nifty Total Market Index on your radar!

FAQs (Frequently Asked Questions)

1. How often is the Nifty Total Market Index rebalanced?

 

The index is rebalanced twice a year, in March and September, to ensure it accurately reflects the market.

 

2. Who should consider investing in the Nifty Total Market Index?

 

It’s suitable for passive investors, long-term investors, market enthusiasts, and those who prefer lower investment risk.

 

3. Which are the top companies included in the Nifty Total Market Index?

 

This index comprises of companies like HDFC Bank, Reliance Industries, ICICI Bank, Infosys, ITC, etc.

 

4. How can I invest in the Nifty Total Market Index?

 

You can invest in the index through the Groww Nifty Total Market index fund.