India, with its growing young population, presents plenty of opportunities for businesses and investors.
According to a 2023 report by Pew Research Center, people under the age of 25 account for more than 40% of India’s population. This vast and youthful population – with a median age of 28 compared to 38 in the United States and 39 in China – fuels domestic consumption, drives innovation, and supports economic growth. For reference, the median age in Singapore is nearly 43 years.
Furthermore, India’s government has implemented various reforms and initiatives to promote economic growth and attract foreign investment. These initiatives, such as the “Make in India” campaign and infrastructure development projects, create favourable conditions for businesses to thrive and generate wealth.
Investors can tap into the huge growing market, standing as the fourth largest stock market in the world today, by investing through the country’s Nifty 50 index.
Read Also: Guide To Investing In Chinese Equities Via Unit Trusts And ETFs
What Is The Nifty 50
The Nifty 50 comprises the biggest 50 companies listed on the National Stock Exchange of India (NSE), representing diverse sectors including technology, finance, healthcare, and consumer goods. These companies are well-positioned to benefit from India’s long-term growth trajectory.
Some of the popular companies included in the Nifty 50 are:
- Banking and finance: HDFC Bank, ICICI Bank, and Reliance Industries
- IT giants: Infosys and Tata Consultancy Services
- Telco: Bharti Airtel (a subsidiary of Singtel (SGX: Z74))
- Consumer goods: Hindustan Unilever, Nestle India, and ITC
Source: Google Finance
The Nifty 50 Index represents around 54% of the free float market capitalisation of the stocks listed on the NSE. Therefore, it is often considered a barometer of the Indian economy and provides a useful benchmark for investors.
By sector, financial services comprise most of the index at 32.9%, followed by information technology (12.8%), and oil, gas & consumable fuels (11.3%).
Source: PrimeInvestor
Here’s a list of Nifty 50’s top 10 components by weight:
| Company | Weight |
| HDFC Bank Ltd | 11.3% |
| Reliance Industries Ltd | 8.6% |
| ICICI Bank Ltd | 7.74% |
| Infosys Ltd | 5.82% |
| ITC Ltd | 4.16% |
| Bharti Airtel Ltd | 3.95% |
| Tata Consultancy Services Ltd | 3.76% |
| Larsen & Toubro Ltd | 3.73% |
| Axis Bank Ltd | 3.03% |
Source: Nifty 50 Factsheet
Over the past five years, the Nifty 50 index has produced an annualised return of 15.6%. Since its inception in 1995, the index has returned 11.9% annually. Here are some other key valuation figures of the index (as of 30 September 2024):
| Nifty 50 Index | |
| Price-to-earnings ratio | 24.3x |
| Price-to-book ratio | 3.9x |
| Dividend yield | 1.2% |
Source: Nifty 50 Factsheet
How To Invest In The Nifty 50
One of the most efficient and cost-effective ways to gain exposure to the Nifty Fifty index is through exchange-traded funds (ETFs). ETFs are investment funds that trade on stock exchanges similar to stocks, and they track the performance of an underlying index or asset class.
As a Singapore investor, you can gain exposure to the Indian stock market by investing in ETFs that mimic the Nifty 50 index. Interactive Brokers (IBKR), a leading online brokerage firm, offers access to ETFs that track the Indian stock market bellwether.
Opening an IBKR account from Singapore is straightforward. You only need to provide your personal information, proof of identity, and financial details. Once your account is approved, you can fund it via bank transfer or other methods. Here’s a step-by-step guide on how to open an IBKR brokerage account.
Moreover, IBKR offers competitive commissions that can be as low as US$0.005/share for the US market – where several ETFs tracking the Nifty 50 are listed. We’re looking at ETFs listed in countries that Singapore investors have easy access to. In contrast, gaining direct access to India’s stock market can be more complicated.
Here are a few of ETFs that track the Nifty 50 index and also other broader indices of India:
| ETF | Ticker | Tracking | Listed Country | Number of Holdings |
| iShares India Nifty 50 ETF | INDY | Nifty 50 | United States | 50 |
| Global X India Nifty 50 ETF | NDIA | Nifty 50 | United States | 50 |
| iShares MSCI India ETF | INDA | MSCI India | United States | 151 |
| iShares MSCI India UCITS ETF (Acc) | NDIA | MSCI India | London (Ireland domiciled) | 151 |
| WisdomTree India Earnings Fund | EPI | WisdomTree India Earnings Index | United States | 476 |
As you can see from the table above, there are also ETFs tracking other indices like the MSCI India and WisdomTree India Earnings Index. Investors can choose to explore broader Indian market ETFs if they are looking for further diversification in the market.
The iShares MSCI India ETF tracks the MSCI India Index (covers around 85% of the Indian stock market) while the WisdomTree India Earnings Index consists of Indian companies ranked according to their earnings potential.
Read Also: Investing With Interactive Brokers (IBKR): Here’s What Investors In Singapore Need To Know
Understand The Risks Of Investing In India’s Nifty 50
When investing in foreign-listed ETFs, it’s essential to be aware of the other cost implications, the expense ratio of the ETFs, dividend withholding tax and currency exchange rate fluctuations.
For instance, as a Singapore investor and non-US tax resident, investors may be charged a 30% dividend withholding tax for US-listed ETFs.
Additionally, fluctuations in the exchange rate between the US dollar and the Singapore dollar can impact the overall returns on your investment. Of course, the currency of the underlying investments, the Indian Rupee, can also affect your returns.
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