Your Questions Answered: How is the Nifty 200 Momentum 30 Index different from Nifty 200 Index?
high-momentum stocks within the Nifty 200 universe. However before we understand what the Nifty 200 Momentum 30 Index is, it is important that we understand what the Nifty 200 Index is. The Nifty 200 is a broad-based market capitalization weighted index launched by the National Stock Exchange of India (NSE) in 1993.
It comprises 200 companies spread across various sectors, including large-cap and mid-cap stocks. The Nifty 200 holds immense significance for various reasons: Market representation: It represents approximately 82% of the free-float market capitalization of all listed companies on the NSE as of September 29, 2023. This translates to a comprehensive picture of the overall market performance.
Benchmark for mutual funds: Many actively managed equity mutual funds in India benchmark their performance against the Nifty 200. This allows investors to compare the fund's returns to the broader market and assess the fund manager's skills. This index, launched in 2002, tracks the performance of the top 30 companies within the Nifty 200 based on their "Normalised Momentum Score." This score considers both the 6-month and 12-month price returns of each company, adjusted for daily price return volatility.
Essentially, the index identifies companies experiencing strong recent price appreciation while accounting for risk associated with that growth. Selection: The index reviews all companies in the Nifty 200 every six months (June and December). Scoring: It calculates the normalised momentum score for each company.
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