Sensex, Nifty rallied over 1300% in 25 years; here’s how you can invest in them

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Indian equity markets have delivered robust returns to investors in the last 25 years. This is evident from the superlative performance of the benchmark equity indices BSE Sensex and NSE Nifty. Both these indices have multiplied investor’s wealth by over 14 times since April 1995. While the 30-share index Sensex climbed 1,329% to 49,159 during the period, the 50-share NSE Nifty index surged 1,310% to 14,637. Before moving ahead, let’s understand what are Sensex and Nifty.

Sensex is a key equity index that consists of the top 30 companies of India. This included players like oil-to-telecom behemoth Reliance Industries, financial majors SBI, HDFC Bank, HDFC and ICICI Bank, among others. Likewise, Nifty consists of the top 50 players of the country. So, do you want to be a part of an exciting investment journey going ahead by investing in Sensex and Nifty? Here’s is a quick guide to become a part-owner of these indices.

– Buying stocks directly equivalent to stock’s weightage

This is the direct method of investing in the stock markets. Every stock has its own weightage in the benchmark indices. For example, HDFC Bank has a weightage of over 11%, Reliance has a weightage of nearly 10% and Infosys 7%, as of 3rd April 2021. An investor can invest as per the weightage of different constituents of the indices. This way can be expensive as through this method you need to buy the whole stock, which means you cannot buy the fraction of stocks. This is a tedious job and needs re-alignment in case of any rejig in indices.

-Investing via Index Mutual Funds/ ETF

The other easy way is to invest in index mutual funds. Through this method, allows you to invest smaller amounts. Here fund managers manage the money you invest in proportion to the weightage of the stocks. For example, you can invest through systematic investment plans (SIP) which can be as low as Rs 500. Investing through this channel means a low expense ratio of around 0.5% or even less. If an investor is looking for long-term investment, then investing through index funds can be the best possible way to meet your long-term financial goals. Some of the index mutual funds are SBI ETF Sensex, UTI Sensex ETF, HDFC Index Sensex Fund, LIC MF ETF, Franklin India Index NSE Nifty Fund, ICICI Prudential Sensex Index Fund.