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

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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Related FAQs

Why are ETF or Exchange Traded Funds not popular in India?

Exchange traded fund is a freely marketable security which tracks a particular index, commodity, bonds or combination of assets. they aren't popular as there is no additional tax incentives, not enough liquidity, under performs most of the time, lack of choices, lack of institutional interest, costs are low but not enough and lack of awareness.

Can I buy 1 share of stock in India?

Did you ever think of investing in stock market? Can you buy a single share? Yes, you can buy one share of stock in India. There isn't any reason why you can't do so. Let's see how is it possible.

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.

How are ETFs different from Mutual Funds?

ETFs (Exchange Traded Funds) and Mutual Funds are similar investment vehicles that provide the investors various features. Both have their benefits and shortcomings. ETFs are a good option for passive investors who want to invest in a particular Index or Sector without much rebalancing. On the other hand, Mutual Funds are a better option for active investors who are more active with their investments. One can switch between funds according to their current strategies.

Can I trade or invest Rs 100 in the share market of India?

You can definitely trade or invest Rs 100 in Indian stock markets. There are no monetary requirements to enter the stock market hence you can buy any share that is trading under Rs 100. Apart from direct stock investing/ trading, there are some indirect ways to own shares over Rs 100. This can be done through Mutual Funds.

What is the concept of 'Buy the Dip', Should you apply it?

Buy the Dip represent an investing strategy wherein you add on to your existing investments in the case of any small or major market correction. This strategy is beneficial for long-term investments as it helps to reduce the overall cost and also increases the overall profitability.

Are ETFs only for stocks?

ETFs are a financial instrument made to track an underlying asset and provide similar returns based on the performance of the underlying. ETFs are listed on stock exchanges which make it easier to buy and sell at desired prices. ETFs are not only limited to stocks but cover a wide range of investment avenues like Commodities, Bonds, etc.

What are the charges in an ETF?

ETFs are investment instruments that are listed on stock exchanges that offer investors to get exposure to a variety of asset classes. ETFs can be of different types tracking a particular asset class like Index, Commodity, and a particular sector. There are some changes in an ETF that include the Expense ratio and some other fixed charges charged by brokers, SEBI, etc.

How to add all Nifty 50 stocks in Zerodha Kite?

Zerodha is Indias largest discount broker in terms of the trading volume. Here you can create your own wishlist on the Kite application. The kite application is the trading terminal provided by Zerodha which is free to all its clients. The following steps can be followed to add the stocks to your watchlist.

What are the types of ETFs available for investment?

Exchange-Traded Funds or ETFs are an investment tool that tracks particular securities like Equity, Commodity, Bonds, etc. ETFs are available for many categories from which one can choose from. These are listed on Stock Exchanges (NSE & BSE) hence there is ample liquidity and one can easily buy and sell these at their desired price during market hours. Some ETFs available for investment in Indian markets are Equity ETFs, Debt ETFs, etc.