A Nifty Next 50 index fund is a mutual fund that invests in the 50 companies ranked 51st to 100th by free‑float market capitalization on the National Stock Exchange (NSE).
The Nifty Next 50 index fund holds these companies in the proportion as the Nifty Next 50 index.
These companies are below the 50 largest companies in the Nifty 50 and are often called the Nifty Junior.
Nifty Next 50 index funds copy the index. Do not pick individual stocks.
Therefore the Nifty Next 50 index fund holds the companies in the same weights and only changes when the index changes.
The index is a large‑cap index. Its companies are on the smaller side of that group.
This gives the Nifty 50 index fund a different sector mix and a different level of volatility compared with the Nifty 50.
What the Nifty Next 50 index contains
| Feature | Detail |
|---|---|
| Companies | The 50 companies in the Nifty 100 that are not in the Nifty 50 and are ranked 51st to 100th by market capitalization |
| Weighting | Free‑float market capitalization, which counts only shares that are available for public trading. Caps are applied to some stocks at rebalancing. |
| Review | Every six months |
| Share of the market | 10.86% of the free‑float market capitalization of stocks listed on the NSE as of September 2025. |
| Sector mix | Led by services and capital goods. This differs from the Nifty 50, which has information technology and oil and gas. |
The Nifty 50 and the Nifty Next 50 together make up the Nifty 100.
A Nifty Next 50 fund adds the layer of large companies to a portfolio that already holds the Nifty 50.
Benefits of a Nifty Next 50 index fund
| Benefit | Why it matters |
|---|---|
| layer of large companies | It holds companies that may become tomorrows Nifty 50 members. |
| Different sector mix | It has weight in financial services and capital goods than the Nifty 50. This can diversify a portfolio that is mainly built on the Nifty 50. |
| Low cost | Index funds usually charge lower expense ratios than active funds. |
| Transparent | The holdings follow a published index methodology making the Nifty Next 50 index fund rules‑based and transparent. |
| Automatic updates | Companies that grow into the Nifty 50 leave the Nifty Next 50 index fund and new companies enter it at each review. |
Risks of a Nifty Next 50 index fund
| Risk | What it means |
|---|---|
| Market risk | The Nifty Next 50 index fund falls when the market falls and it has no manager to move from weak stocks. |
| Higher volatility than the Nifty 50 | The Nifty Next 50 index fund has volatility than the Nifty 50. The companies are smaller. Swing more than the biggest ones. |
| Concentration in a few sectors | A few sectors, such as financial services and capital goods carry a large share of the Nifty Next 50 index fund. |
| Frequent changes in constituents | Companies move in and out at each review making the Nifty Next 50 index fund less stable than the Nifty 50. |
| Tracking error | The Nifty Next 50 index fund may have a tracking error because of costs and cash holdings. |
Nifty 50 compared with Nifty 50
| Feature | Nifty 50 index fund | Nifty Next 50 index fund |
|---|---|---|
| Companies | The 50 largest companies by free‑float market capitalization | Companies ranked 51st to 100th |
| Share of the NSEs market capitalization | More than half of the market capitalization | About one‑tenth of the market capitalization |
| Typical volatility | Lower | Higher |
| Sector emphasis | More information technology and oil and gas | More financial services and capital goods |
| Role in a portfolio | A core large‑cap holding | A complement to the core adding companies just below the largest |
Tax on a Nifty Next 50 index fund
| Holding period | Tax on the gain |
|---|---|
| 12 months or less | 20% short‑term capital gains tax |
| More than 12 months | 12.5% on gains above ₹1.25 lakh in a financial year |
Who may consider a Nifty Next 50 index fund
The Nifty Next 50 index fund suits investors with a horizon of seven years or more who already hold a Nifty 50 or a broad market fund.
They want to add the tier of large companies.
The Nifty Next 50 index fund is less suited for money that is needed within a years.
It is not a substitute for a core holding because its swings are larger and its sector mix is narrower.
What investors should take from this
A Nifty Next 50 index fund gives low‑cost access to companies below the biggest names.
It has a sector mix and a volatility level that differ from the Nifty 50.
How much of a portfolio the Nifty Next 50 index fund occupies matters more, than the funds name.
The factsheet shows its expense ratio, tracking error and top holdings.
Kuvera offers mutual funds, including index funds and the factsheet for any Nifty Next 50 fund shows its expense ratio and tracking error.
Frequently Asked Questions
1. What is the Nifty Next 50 index?
It is an index of the 50 companies in the Nifty 100 that’re not in the Nifty 50 ranked from 51st to 100th by free‑float market capitalization.
2. How often does the Nifty Next 50 change?
It is reviewed every six months. Companies join or leave depending on their ranking.
3. Is the Nifty Next 50 a mid‑cap index?
No. It is a large‑cap index. Its companies are at the lower end of the large‑cap group.
4. Is a Nifty Next 50 fund than a Nifty 50 fund?
It has tended to move than the Nifty 50 because its companies are smaller. Both carry market risk.
5. How is a Nifty Next 50 index fund taxed?
It is an equity‑oriented fund. Gains on units held for 12 months or less are taxed at 20%. Gains on units held longer are taxed at 12.5% on amounts above ₹1.25 lakh, in a financial year.
Mutual fund investments carry market risk. Read all scheme documents carefully. The tax rules mentioned here are current. May change.
