CNX Nifty Junior Index (Nifty Junior)
The CNX Nifty Junior Index is the second most liquid and followed index in Indian markets after Nifty 50 Index. The CNX Nifty Junior Index (preferably Known as NIFTY JUNIOR) is a weighted average of liquid and top capitalized 50 stocks from 51-100 (i.e. after Nifty top 50 stocks) listed on the National Stock Exchange (NSE). Nifty Junior represents about 12.02% of the free float market capitalization of the 1600 stocks listed on NSE as on March 31, 2015. It is a broad based benchmark that offers exposure to the Indian market in one efficient portfolio.
The CNX Nifty Junior Index is computed using free-float adjusted market capitalization with base date of Nov 3, 1996 indexed to base value of 1000. The level of the index reflects the market value of all the stocks in the index relative to particular base market capitalization value.
The following chart displays the Sector Representation of the CNX Nifty Junior Index sorted by weight.
Index Top 10 Components
The following chart displays the Top 10 Components of the CNX Nifty Junior Index sorted by weight.
How to trade Nifty Junior?
A trader who wishes to get an exposure to the Nifty Junior Index has basically two choices. Let us take an illustration that Mr. Shrinivasan has Rs. 2,00,000 and he wants to utilize this capital to get exposure to the Nifty Junior Index.
Option I – Buy all 50 Nifty Junior Stocks
Buy all the fifty stocks in the same proportion as they are in the Nifty Junior index. So, Mr. Shrinivasan had to allocate 4.28% of Rs. 2 lac to Bharti Infratel Ltd, 4.09% of Rs. 2 lacs to Eicher Motors Ltd, 3.63% of 2 lacs to Aurobindo Pharma and so on. This will create a basket of 50 stocks which will result in similar returns as will be registered by the Nifty Junior Index during the same period of investment.
Option II – Nifty Junior Index ETF
Just like NiftyBees provides exposure to the 50 stocks in NIFTY Index in a single basket, JuniorBees helps an investor to match the performance of the Nifty Junior Index by investing in ETFs units.
So, He can buy Nifty Junior Index ETF worth of Rs. 2,00,000, which is for this example is JuniorBees. JuniorBees ETF seeks to replicate, net of expenses, the Nifty Junior Index. At present, JuniorBees is quoting at Rs. 200 approximately 1/100th of the Index Level.
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