Often you have heard the word Alpha in life, depicting larger-than-life personalities, who are better than the average and that is exactly what we are referring to when we are talking about the Nifty Alpha 50 Index. So, before we dig into the index, let’s understand what is an Alpha in the stock market.
So, Alpha in investment or stock market refers to a financial metric that determines, a stock’s or investment strategy’s ability to beat the market return. For instance, if the market’s average return is 8%, then if a Stock is providing a 10% return, it can be termed as Alpha as it has beat the market return.
Thus, this article will discuss the NIFTY ALPHA 50 index, its constituents, selection criteria, investment process, returns, risks, and a lot more.
- NIFTY ALPHA 50 Index – Overview & Constituents
- Selection Criteria
- Factors Affecting the NIFTY ALPHA 50 Index
- NIFTY ALPHA 50 Index Calculation Method
- Performance and Returns
- Risk and Volatility
- How to Invest in the NIFTY ALPHA 50 INDEX?
- Top Index Funds & ETFs of Nifty Alpha 50 Index
- Conclusion
- NIFTY ALPHA 50 Index | FAQs
NIFTY ALPHA 50 Index – Overview & Constituents
The NIFTY ALPHA 50 index tracks the performance of the top 50 stocks listed on the NSE as per their ranking according to their Alphas. The highest alpha in the index gets assigned the highest weight in the index, which means the weights of the index are assigned as per the alphas of the stocks. The top 50 stocks are picked based on high alphas recorded in the past year.
The NIFTY ALPHA 50 index stocks list includes – (As of 19 February 2025)
| ABB India Ltd. | Kaynes Technology India Ltd. |
| Aditya Birla Real Estate Ltd. | Kfin Technologies Ltd. |
| Amara Raja Energy & Mobility Ltd. | Lupin Ltd. |
| Apar Industries Ltd. | Mazagoan Dock Shipbuilders Ltd. |
| BSE Ltd. | Motilal Oswal Financial Services Ltd. |
| Bajaj Auto Ltd. | Multi Commodity Exchange of India Ltd. |
| Bharat Dynamics Ltd. | NBCC (India) Ltd. |
| Bharat Electronics Ltd. | NHPC Ltd. |
| Central Depository Services (India) Ltd. | National Aluminium Co. Ltd. |
| Cochin Shipyard Ltd. | Oil India Ltd. |
| Colgate Palmolive (India) Ltd. | Oracle Financial Services Software Ltd. |
| Cummins India Ltd. | PB Fintech Ltd. |
| Dixon Technologies (India) Ltd. | Phoenix Mills Ltd. |
| Glenmark Pharmaceuticals Ltd. | Piramal Pharma Ltd. |
| Himadri Speciality Chemical Ltd. | Prestige Estates Projects Ltd. |
| Hindustan Aeronautics Ltd. | Rail Vikas Nigam Ltd. |
| Hindustan Copper Ltd. | Siemens Ltd. |
| Hindustan Petroleum Corporation Ltd. | Solar Industries India Ltd. |
| Housing & Urban Development Corporation Ltd. | Suzlon Energy Ltd. |
| Indian Railway Finance Corporation Ltd. | Torrent Power Ltd. |
| Indian Renewable Energy Development Agency Ltd. | Trent Ltd. |
| Indus Towers Ltd. | Varun Beverages Ltd. |
| Inox Wind Ltd. | Voltas Ltd. |
| KEI Industries Ltd. | Zomato Ltd. |
| Kalyan Jewellers India Ltd. | Zydus Lifesciences Ltd. |
The top ten stocks by weightage –
| Stocks | Weightage (%) |
| Indian Renewable Energy Development Agency Ltd. | 4.26 |
| Rail Vikas Nigam Ltd. | 3.77 |
| Cochin Shipyard Ltd | 3.61 |
| Inox Wind Ltd. | 3.24 |
| Housing & Urban Development Corporation Ltd | 3.21 |
| Dixon Technologies (India) Ltd. | 3.17 |
| Oracle Financial Services Software Ltd | 3.02 |
| Oil India Ltd. | 2.95 |
| Motilal Oswal Financial Services Ltd | 2.76 |
| Mazagoan Dock Shipbuilders Ltd | 2.74 |
Sectoral Weightage
| Sectors | Weightage (%) |
| Capital Goods | 26.16 |
| Financial Services | 21.91 |
| Healthcare | 7.77 |
| Consumer Durables | 7.19 |
| Constructions | 5.79 |
| Consumer Services | 5.38 |
| Oil, Gas, and Consumable Fuel | 3.89 |
| Chemicals | 3.50 |
Selection Criteria
The stock selection criteria for the equity index NIFTY ALPHA 50 index include –
- As per average daily turnover and average free-float market capitalization of the last six months, 300 companies are shortlisted.
- They need to have a listing history of at least a year
- Trading frequency of 100% during the past one-year period
- Then the alpha is calculated for the eligible securities using the trailing one-year prices and ranked in descending order
- The securities having positive alpha are selected from there for review purposes.
Factors Affecting the NIFTY ALPHA 50 Index
As Alpha stocks are those stocks that offer higher returns than the market, thus the index tracking these stocks that is NIFTY ALPHA 50 index gets affected by the underlying factors of these stocks such as –
- Economy of scale: Market-beating returns are generated when a company has some economy of scale that it can use for its benefit. When a company has large-scale production capacity, it helps reduce the fixed cost per unit and this helps in reducing the overall cost of the products. Thus, the company gets the opportunity to generate more profits, adding to the stock price movement upward, which in turn adds to the value of the index and vice versa.
- Geographical benefit: Similar to the above factor, certain companies have higher alpha due to geographical benefit. For instance, if a pharma company is located in the hills where there are different flora and fauna are abundantly available which they use for making their medicines, won’t they have an upper hand over those companies located in the cities where they need to get the raw materials transported from far away? This also affects the company’s Alpha,
NIFTY ALPHA 50 Index Calculation Method
For the NIFTY ALPHA 50 index, the stocks are selected based on the Alpha of the stock. Once the stocks are shortlisted as per the above criteria, 50 stocks are finalized as per their Alpha.
The higher the alpha, the higher would be the weight of the stocks.
Performance and Returns
Here are the returns for different periods –
Price Returns & Total Returns
| Period | Price Return (%) | Total Return (%) |
| YTD | -11.25 | -11.20 |
| 1 Year | 6.13 | 6.82 |
| 5 Years | 29.17 | 30.06 |
| Since Inception | 20.36 | 21.47 |
Enjoy investing in the top stocks of the NSE universe with the NIFTY ALPHA 50 index on Shoonya App!
Risk and Volatility
NIFTY ALPHA 50 Index encompasses multiple sectors which increases the diversification effect and reduces the risks to a great extent. However, higher alpha means higher returns, but it also means higher risk which needs to be considered, and monitored.
The index has a standard deviation of 25.72 in 1 year and 23.27 in 5 years which shows a high level of fluctuations.
The Beta of the index is also higher at 1.38 for 1 year, and 0.94 for 5 years when compared to the Nifty 50.
How to Invest in the NIFTY ALPHA 50 INDEX?
You can invest in the NIFTY ALPHA 50 Index using ETFs, or index funds, or you can trade them on the trading platform. You can also trade NIFTY ALPHA 50 Index futures, and options in the F&O section of Shoonya’s app. To do so, you have to add the index to your watchlist following these steps –
- Open the Shoonya app.
- Head to the “Watchlist” tab located at the bottom of your screen.
- In the search bar, type “NIFTY IN” or “SENSEX IN” and add it to the watch list, and then you will be able to see the indices. Choose the “Nifty Alpha 50 Index”.
- Once you find your desired index, click on the add option given on the right side.
- Now you can see the index on the watchlist.
Top Index Funds & ETFs of Nifty Alpha 50 Index
- Kotak Nifty Alpha 50 ETF: It has a current NAV of ₹42.14 and the three-year return stands at 9.32%.
- Tata AIA Nifty Alpha 50 Index Fund: It has a current NAV of ₹7.24.
Conclusion
The investors who are willing to take a higher amount of risk to earn higher returns, alpha stocks are suitable for them. However, the investment decisions need to be highly evaluated, and in that, this Nifty Alpha 50 Index can be of great help.
NIFTY ALPHA 50 Index | FAQs
The NIFTY ALPHA 50 index is rebalanced quarterly. The calculation frequency is real-time.
It uses the weights according to the Alpha of the selected stocks.
The current PE of the NIFTY ALPHA 50 index is 36.28.
The NIFTY ALPHA 50 index was launched on 19 November 2012.
The base value used for index calculation is 1000.
The current P/B ratio of the index is 6.54.
The current dividend yield stands at 0.76%.
Source: ValueResearch
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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.