Nifty 50 ETF

A Nifty 50 ETF is an exchange-traded fund that holds the 50 constituents of the Nifty 50 Index in their index weights and lists its units on the National Stock Exchange and Bombay Stock Exchange , where they trade through the day like a share. It is the foundational passive equity product in India: the first such fund, Nifty BeES , listed on 28 December 2001 and began the country’s ETF industry. A Nifty 50 ETF needs a demat account and tracks the index at a total expense ratio of about 0.02 to 0.06 per cent.

Indian investors hold Nifty 50 ETFs for the cheapest available large-cap exposure. ICICI Prudential Nifty 50 ETF charges 0.02 per cent a year, and the category’s combined assets run into several lakh crore, dominated by the SBI Nifty 50 ETF at about Rs 2,05,278 crore, a figure inflated by the Employees Provident Fund Organisation routing its mandated equity allocation through SBI Mutual Fund. This article defines what a Nifty 50 ETF is, lists the main funds with dated expense ratios and assets, sets out how ETFs differ from index funds , and explains the trading mechanics and taxation.

What a Nifty 50 ETF is

The Nifty 50 Index, maintained by NSE Indices Limited, represents the 50 largest Indian listed companies by free-float market capitalisation. An ETF that tracks it buys those 50 stocks in the same weights and issues units against the basket. Each unit is a fractional claim on the whole portfolio, so one unit of Nippon India Nifty 50 BeES traded at a NAV of about Rs 266.91 in early June 2026, roughly one-hundredth of the index level.

The “ETF” distinction matters because it changes how the product is bought. A conventional mutual fund is transacted at a single end-of-day NAV struck after markets close. An ETF, by contrast, is listed and trades continuously between 9:15 am and 3:30 pm on the exchange, so an investor buys and sells at a live market price against another investor, not against the AMC . That price stays tethered to the underlying value through a creation-redemption arbitrage described below, rather than through any administrative rule.

Nifty BeES, launched by Benchmark Asset Management and now run as Nippon India Nifty 50 BeES, introduced this structure to India in December 2001. Benchmark sold its fund business to Goldman Sachs Asset Management in a deal that completed in 2011, and Reliance Capital Asset Management, since renamed Nippon India Mutual Fund , acquired the Goldman Sachs India schemes in 2015. The fund has tracked the Nifty 50 continuously across all three owners.

Nifty 50 Index methodology

Free-float weighting

Constituents are weighted by free-float market capitalisation, which is total market value minus promoter, government and strategic locked-in holdings. A company with a large total market cap but a small public float carries less index weight than its headline size suggests, which is why a state-owned heavyweight can rank below a smaller fully floated private company.

Single-stock weight cap

NSE Indices applies a cap so that no single stock dominates. The cap is enforced at each semi-annual reconstitution, with weights of individual stocks held below the prescribed ceiling, keeping the largest constituents near the low-teens in percentage terms rather than letting one name run away with the index.

Sector composition

Financial services is the dominant block at roughly a third of the index, followed by information technology, energy and consumer names. The Nifty 50 reconstitutes twice a year, in March and September, replacing constituents that no longer meet the eligibility filters with larger, more liquid candidates from the broader universe.

Price return versus total return

The headline Nifty 50 most investors watch is a price-return index, which ignores dividends. The version a fund is judged against is the Nifty 50 Total Return Index (TRI), which reinvests constituent dividends. A well-run Nifty 50 ETF tracks the TRI, so over a full year its return should sit close to the price index plus the index dividend yield, less the expense ratio and any tracking slippage.

List of Nifty 50 ETFs in India

Every Nifty 50 ETF tracks the same index, so the live differences are cost, assets, trading liquidity and tracking error. The table below lists the main funds with total expense ratios and assets under management from the funds’ published monthly disclosures in mid-2026; each AMC’s factsheet is the authoritative source and figures change month to month. Verify the current TER against the AMC factsheet before transacting, since the figure can move at any reconstitution.

Two figures stand out. The SBI Nifty 50 ETF carries the largest assets by a wide margin because the Employees Provident Fund Organisation invests its equity quota mainly through SBI-managed Nifty and Sensex ETFs, so its Rs 2,05,278 crore reflects institutional retirement money rather than retail flow. For a retail investor judging tradeability, the more relevant number is on-screen volume: Nippon India Nifty 50 BeES, the oldest fund, is the most actively traded and shows the tightest spreads.

A cheaper headline TER does not automatically win. ICICI Prudential’s 0.02 per cent is the lowest cost, but a fund saves nothing if it tracks poorly or if its on-exchange spread is wide when an investor needs to deal. The right test combines TER, tracking error against the Nifty 50 TRI, and the bid-ask spread at the size the investor trades.

Nifty 50 ETF versus Nifty 50 index fund

The most common decision is not which ETF, but whether to use an ETF at all rather than a Nifty 50 index fund . Both track the same index. The difference is the wrapper.

The ETF wins on the management fee but adds two costs an index fund avoids: brokerage on each trade and the bid-ask spread paid to the market. For a large lump sum held for years, the ETF’s lower TER usually dominates. For a Rs 5,000 monthly SIP , the index fund is simpler and avoids paying a spread twelve times a year, which is why most systematic investors choose it. The two routes also differ on the applicable-NAV cut-off rule : an index fund order before the cut-off gets that day’s NAV, whereas an ETF fills at whatever price clears on the exchange. A fuller treatment sits in the index fund versus ETF and mutual fund versus ETF comparisons.

How to buy a Nifty 50 ETF

A Nifty 50 ETF is bought exactly like a share. The investor needs a demat and trading account with a broker such as Zerodha, ICICI Direct or Angel One, searches the ETF’s exchange ticker, and places a buy order during market hours. Settlement is on a T+1 cycle, after which units sit in the demat account.

Three habits reduce avoidable cost. First, prefer a limit order over a market order, especially in the less-traded ETFs, so the fill price is controlled rather than swept across a wide spread. Second, deal close to mid-session rather than in the opening or closing minutes, when spreads widen. Third, check the displayed price against the fund’s indicative NAV (iNAV), which most ETF pages publish through the day, and avoid buying at a visible premium. A step-by-step walkthrough is set out in how to buy an ETF on the NSE and the Zerodha-specific how to buy a Nifty 50 ETF on Zerodha .

Trading mechanics

iNAV, premium and discount

Through the trading day, the fund or the exchange disseminates an indicative NAV, an estimate of the per-unit value of the underlying basket updated at short intervals. When the market price sits above the iNAV, the ETF trades at a premium; below it, at a discount. For the large Nifty 50 ETFs these gaps stay small, usually within a handful of basis points, because the basket is liquid and easy to arbitrage. Premiums and discounts widen in thin ETFs and during sharp moves when market-makers step back.

Authorised Participants and creation units

The mechanism that keeps price near value is creation and redemption by Authorised Participants (APs), large institutions appointed by the AMC. APs deal directly with the fund in large blocks called creation units. To create units, an AP delivers the basket of 50 Nifty stocks (or the permitted cash equivalent) to the AMC and receives new ETF units; to redeem, it returns units and receives the basket back.

This converts any price gap into a riskless trade. If the ETF trades above iNAV, an AP buys the cheaper underlying stocks, creates units and sells them into the richer ETF, pocketing the difference and pushing the ETF price back down. If the ETF trades below iNAV, the reverse runs. The arbitrage is why a Nifty 50 ETF tracks its index without the AMC having to manage the market price directly.

Tracking error

Tracking error measures how far the ETF’s returns drift from the Nifty 50 TRI, expressed as the standard deviation of the daily return difference. It comes from the expense ratio, from cash held against dividends and redemptions, and from the cost of rebalancing at reconstitution. The large Nifty 50 ETFs report low tracking error because the index is liquid and the basket is cheap to replicate. A fund whose tracking error is materially wider than its peers is leaking return somewhere, and that gap matters more over a long hold than a one-basis-point difference in the headline TER.

Taxation

Nifty 50 ETFs are equity-oriented , so they are taxed like listed shares, and a sale is a transfer on the exchange that attracts securities transaction tax.

For units held more than 12 months, long-term capital gains are taxed at 12.5 per cent on gains above the Rs 1.25 lakh annual exemption under Section 112A , the rate that applies to transfers on or after 23 July 2024. For units held 12 months or less, short-term capital gains are taxed at 20 per cent under Section 111A , raised from 15 per cent by the Finance (No. 2) Act, 2024 for transfers on or after 23 July 2024. Both rates carry the applicable surcharge and cess.

This equity treatment does not extend to every ETF. A gold ETF , a silver ETF and a debt ETF follow different and generally less favourable rules, so the equity-ETF tax position should not be assumed for non-equity ETFs.

Choosing between Nifty 50 ETFs

Since every Nifty 50 ETF holds the same index, the decision reduces to three comparisons the table above starts but does not settle. The first is the all-in cost, which is the TER plus the bid-ask spread paid on the way in and out, not the headline TER alone. ICICI Prudential’s 0.02 per cent looks cheapest, but for a small retail lot the spread on a less-traded fund can swamp a one- or two-basis-point TER difference. The second is tracking error against the Nifty 50 TRI: a fund that consistently lags the index by more than its expense ratio is leaking return through poor replication or cash drag, and that gap compounds over a long hold. The third is on-screen liquidity, which decides how cheaply the investor can actually deal in size.

For a buy-and-hold retail investor putting a lump sum to work, the practical shortlist is the largest, most liquid funds: Nippon India Nifty 50 BeES, the oldest and most actively traded, and the low-cost ICICI Prudential and Kotak ETFs. For a very large or institutional ticket, the SBI ETF’s scale and the UTI ETF’s assets make them natural homes, though their headline assets are partly retirement-fund money rather than a guide to retail tradeability. An investor who values automated monthly investing over the last basis point of fee should step back to a Nifty 50 index fund instead, where the SIP runs natively against the AMC.

Nifty family beyond the Nifty 50

The Nifty 50 ETF is the largest member of a wider family of index ETFs on the NSE. A Nifty Next 50 product extends exposure to the 51st to 100th largest companies, and holding a Nifty 50 ETF alongside a Nifty Next 50 holding replicates the Nifty 100 with control over the split. A Bank BeES tracks the Nifty Bank index for a concentrated financials bet, and a Sensex index fund follows the 30-stock BSE benchmark, which overlaps heavily with the Nifty 50 but is not identical. Government-promoted ETFs such as the CPSE ETF and Bharat 22 ETF sit in the same listed-ETF wrapper but track narrow, policy-driven baskets rather than the broad market, and sector ETFs such as an FMCG or consumption product carry the concentration of a single theme. The Nifty 50 ETF is the broad-market default against which those narrower products are judged.

Role in a portfolio

A Nifty 50 ETF works as the core large-cap holding in a portfolio: a single instrument covering the 50 largest listed companies at a cost in low single-digit basis points, with the active-versus-passive evidence in India increasingly favouring low-cost index exposure for the large-cap segment. It is usually paired rather than held alone. A common build adds a Nifty Next 50 holding to extend coverage toward the Nifty 100, or a mid- and small-cap allocation for the smaller end of the market that the Nifty 50 excludes. The decision between holding it as an ETF or as an index fund comes down to whether the investor deals in lump sums through a demat account or invests monthly through a folio.

See also

• Mutual funds in India
• ETF in India
• Equity ETF in India
• Nifty 50 Index Fund
• Nifty BeES
• Nifty 50
• Index fund versus ETF
• Mutual fund versus ETF in India
• How to buy an ETF on the NSE
• How to buy a Nifty 50 ETF on Zerodha
• Index fund in India
• Active versus passive equity in India
• Nifty Next 50 Index Fund
• Nifty 100 Index Fund
• Sensex Index Fund
• Bank BeES
• Gold ETF in India
• Silver ETF in India
• Debt ETF in India
• Bharat 22 ETF
• CPSE ETF
• FMCG and consumption fund
• International ETF in India
• Tracking error
• NAV
• TER regulation and slabs
• Applicable NAV cut-off rule
• SIP
• Dematerialisation of MF units
• Demat account
• Zerodha Fund House
• Equity mutual fund taxation in India
• Section 112A
• Section 111A
• Securities transaction tax
• National Stock Exchange
• Bombay Stock Exchange

External references

• NSE Indices
• NSE Indices Nifty 50 factsheet
• National Stock Exchange
• Bombay Stock Exchange
• Nippon India Mutual Fund ETF page
• AMFI India
• SEBI

References

1. NSE Indices Limited, Nifty 50 Index methodology document.
2. NSE Indices Limited, Nifty 50 and Nifty 50 TRI factsheet.
3. SEBI (Mutual Funds) Regulations, 1996, provisions on exchange-traded funds and total expense ratio.
4. Finance (No. 2) Act, 2024, amendments to Sections 111A and 112A of the Income-tax Act, 1961, effective 23 July 2024.
5. AMFI monthly average AUM disclosures for ETF schemes.