Your Questions Answered: I want to invest in the Nifty Healthcare Index. What are its pros and cons?
Pradyuman Reddy, Hyderabad, Telangana The Nifty Healthcare Index is a sectoral index on the NSE that captures the behaviour and performance of healthcare companies in the Indian economy on a real-time basis. It is constituted of 20 stocks that are listed on the NSE and are involved with the health and wellness industry. These include pharmaceuticals, hospitals, diagnostics, medical equipment, biotechnology, and other allied services.
The Nifty Healthcare Index was launched on April 1, 2004, with a base value of 1000. It is computed using the free-float market capitalization method, which means that only the shares that are available for trading in the market are considered for calculation. The index is rebalanced semi-annually in June and December, and the weightage of each stock is capped at 10%.
The Nifty Healthcare Index is designed to reflect the growth potential, profitability, innovation, and resilience of the healthcare sector in India. It is also used as a benchmark by investors, fund managers, analysts, and researchers who want to track and compare the performance of the healthcare sector with other sectors and indices. The Nifty Healthcare Index has shown remarkable growth over time, especially in the last decade.
The index has increased from 1000 in April 2004 to 10865.35 as of January 12, 2024, which translates to a compounded annual growth rate (CAGR) of 14.6%. The index has outperformed the broader Nifty 50 index in 2023. The Nifty Healthcare Index has also delivered superior returns than other sectoral indices such as Nifty Bank, Nifty IT, Nifty FMCG, etc in 2023.
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