Benchmark Index, Nifty50, represents weighted average price of 50 largest Indian Companies by Market Cap listed on National Stock Exchange. It is the most traded Indian Futures. One cannot directly buy the Index. But here are the ways to buy it indirectly.

1.      Index Funds:

Index Funds are 100% Equity based Mutual Fund that invests directly into the stocks which are included in the Benchmark Index. These are professionally managed funds which track stocks on daily basis. Here we are talking about Nifty Benchmark Index. Therefore, these Index Funds can only invest in stocks which are included in Nifty50. Considering it to be a 100% equity mutual fund, it can be placed in high risk in risk-o-meter. However, these are least risky mutual funds in 100% equity based mutual funds category.

One can buy them Lump sum or do an SIP.

Nifty50 Index gained 17% over the last 1 year. Here are some of the Index Funds sorted according to their Asset under Management (AUM):

Source: MoneyControl

2.      Exchange Traded Funds:

Exchange Traded Funds are more of passively managed mutual funds as compared to Index Funds. Just like Index Mutual Funds, ETFs also invest in stocks that are included in the benchmark, but ETFs are not managed on daily basis. As they are not actively managed, fees and commissions are very less as compared to Index Funds. ETFs are actively traded on Stock Exchanges to be bought and sold throughout the day.

NIFTYBEES is the Most famous Nifty ETF ever. Hwoever, it's AUM is low.

Here are some of the ETFs sorted according to their Asset under Management (AUM):

Source: MoneyControl

Click here to read on how to invest in Gold

3.      Futures:

Index Funds and Exchange Traded Funds are used for investing in Nifty50; however, Nifty50 Futures are more of a Trading instrument. At any given date, 3 Futures contract are open; This Month, Next Month and Far Month. So on any day for the Month of January; January, February and March are open future contracts called as This Month, Next Month and Far Month respectively.

This Futures contracts can be used to Long or Short Nifty50 by paying the same Margin amount on the lot size of 75.

The Contracts are settled on last Thursday of every Month. (i.e. This Month Contract). On that day, either one needs to square off the open positions or shift to other months contract by paying differential margin.

Closing price on spot is 14347.25. January, February and March contracts are trading at 14375, 14409 and 14425 respectively. So, if you are long on Nifty January Futures by paying margin on 14375 points and remain so till the expiry, either you need to square it off by selling or shift your long to February futures by paying additional margin of 34 points. The additional margin of 34 points is called ‘Rollover cost’. It can be positive or negative.

4.      Options:

Options are also more of a trading instrument, but mostly used as a Hedge against other open positions. Nifty options contracts expire every Thursday.

There is an Option chain with the gap of 50 points of Nifty50. There are 4 ways to trade in this options chain, 2 each for Long and Short Nifty50.

Buying Call options or selling Put options are used as a Buy Trade on Nifty50.

Buying Put Options or selling Call options are used as a Sell Trade on Nifty50.

While buying Call or Put Options, one need to pay nominal margin according to the strike price chosen, while selling Call or Put Options, one needs to pay margin equivalent to futures contract.

It is a vide subject matter and requires a separate Blog of its own.

All data as on 10^th January, 2021