Your Questions Answered: What is Nifty Smallcap250 Quality 50 Index?

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Tribhuvan Chauhan, Patna, Bihar

Small-cap stocks offer high potential returns but also come with inherent volatility. Enter the Nifty Smallcap250 Quality 50 Index, a unique index targeting quality companies within the small-cap realm, aiming to deliver superior returns with potentially controlled risk. 

The Nifty Smallcap250 Quality 50 Index was launched by NSE Indices Limited (formerly known as India Index Services & Products Limited) in December 2017. It is part of the Nifty family of indices, which are the most widely used benchmarks for the Indian equity market.

The Nifty Smallcap250 Quality 50 Index is a benchmark that tracks 50 high-quality companies handpicked from the broader Nifty Smallcap250 Index. These chosen companies undergo a rigorous selection process based on three key parameters:

Companies from the Nifty Smallcap250 are assigned «quality scores» based on the three parameters mentioned above. The top 50 companies with the highest scores make it to the index. Additionally, the weightage of each stock within the index is determined by a combination of its quality score and free-float market capitalization. This ensures a balance between quality and market representation. The index is derived from its parent index, Nifty Smallcap 250, which includes the bottom 250 companies from the Nifty 500 index based on their free float market capitalization. 

(As of December 20, 2023)

In conclusion, the Nifty Smallcap250 Quality 50 Index is a stock market index that tracks the performance of the top 50 high-quality small-cap stocks in India. The index offers exposure to high-quality small-cap companies that have strong fundamentals and growth potential while diversifying across sectors and industries. The index can