Can I buy 1 share of Nifty or Bank-Nifty?

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Short Answer

Nifty is an index comprising of the top 50 companies in terms of the market capitalization of the NSE (National Stock Exchange). Bank Nifty, on the other hand, comprises 12 top banking stocks of the NSE. These indices are an attractive option for investors as they track the performance of the most valuable companies of the NSE. Know if you can purchase one share in these indices.

Detailed Answer

First let's understand what is Nifty and Bank Nifty?

Nifty is an index comprising of the top 50 companies of the NSE (National Stock Exchange) in terms of market capitalization. These companies together make up to index. The weightage of an individual stock is different according to its market cap. This index has a combination of all sectors across the NSE.

Similarly, the Bank Nifty is an Index comprises of the top 12 banking companies of the NSE in terms of market capitalization. This index tracks the performance of the banking industry.

Can you buy 1 share of Nifty and Bank Nifty?

The answer to this question is Yes, one can indirectly purchase one unit or share of Nifty or Bank Nifty in an ETF (Exchange Traded Fund) form. As these are indices, made up of multiple stocks, one cannot directly buy the Index from the cash market. To solve this problem there are Derivatives such as Options and futures, that lets you take exposure in the Nifty as well as Bank Nifty. Although futures are a good option to buy these indices, the main problem lies in the lot size. To buy the Nifty index, the lot size of a futures contract is 75. Therefore one cannot buy 1 unit of the Nifty in the form of derivatives.

To solve this problem, ETFs come into play. ETFs are a pool of funds that collect money from individual investors and invest it together into a pool of assets. In the scenario, the ETF house will buy all the shares in the Nifty or Bank Nifty in the same proportion. In this way, the fund will copy the returns of the Nifty/Bank nifty.

ETFs can be bought like shares from the secondary market (NSE, BSE). An investor can buy the desired number of shares as they want with a minimum of 1 unit of the ETF.

Buy share of NIFTY and Bank NIFTY

Therefore one can buy 1 share of a Nifty ETF or a Bank Nifty ETF to take exposure in Nifty or Bank Nifty. Some other alternatives of buying the Nifty and Bank Nifty is to buy a Futures contract or an Options contract to get exposure in these Indices. But the problem is that one cannot buy 1 share of Nifty or Bank nifty by these options. The minimum quantity for a futures contract is the 1 Lot which consists of 75 shares of Nifty and 25 shares of the Bank Nifty.

Tagged With: Exchange Traded FundNifty 50Bank NiftyDerivativesNifty ETF
Categories: Stock Market
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Discussion (2)

True. It is reported that the lot size of Nifty is a minimum of 75 and one needs around 7.50 lakhs INR to purchase a lot.

Trading in the nifty is much safer than in the bank nifty because the movement in the bank nifty is typically between 100 and 200 points every few minutes, making it more likely that a stop loss will be hit and the trend will then reverse. So, I think nifty is a better option.

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How does an ETF work?

ETF is an investment instrument that tracks a group of securities from a particular asset class and performs according to it. It is managed by a Fund manager who makes sure that the ETF tracks the underlying asset accurately. ETFs are listed on the Stock Exchanges therefore one can buy & sell them within the market hours at their desired prices.

How can I buy the Nifty?

The Nifty 50 is an index consisting of the top 50 companies in terms of market cap, present on the NSE (National Stock Exchange). These companies can be termed as Large-Cap stable companies which are on top of the list. Buying Nifty directly is not possible as Nifty is not a stock that one can buy. One can get exposure to the Nifty indirectly by some investment lools like ETFs, etc.

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