Big picture: why broad indices matter
When investors talk about “the market,” they usually mean a broad index rather than a single stock. Indices condense thousands of individual price moves into a few simple numbers, making it easier to judge whether conditions are calm, stretched, or outright risky. In India, the NIFTY 500 and the NIFTY IT index are two important benchmarks that together show both the width of the market and the strength of one of its most influential sectors.
NIFTY 500 – a map of almost the entire market
The NIFTY 500 is the country’s first broad‑based index on the National Stock Exchange, covering 500 companies drawn from roughly 1,300 listed stocks. These names span more than 20 sectors, with financial services, IT, oil and gas, FMCG, and automobiles accounting for a large chunk of the total weight. Because it captures around 96 percent of NSE’s free‑float market capitalisation and trading value, movements in the NIFTY 500 share price give a far more complete picture of overall sentiment than a narrow 50‑stock barometer can.
How the NIFTY 500 is built and maintained
To enter this index, a company must meet several liquidity and size tests based on market capitalisation, trading turnover and listing history. Stocks are ranked, added or removed in a semi‑annual review, ensuring that only actively traded, investible names remain inside the basket while weaker or illiquid counters drop out. The index itself is calculated on a free‑float basis, which means only the shares actually available for trading are counted when working out the live NIFTY 500 share price, making it a more realistic snapshot of what ordinary investors can buy.
Reading the NIFTY 500 share price in practice
For someone tracking a portfolio or planning long‑term investments, the NIFTY 500 can act like a health report on Indian equities. Strong, broad‑based rallies where most sectors rise along with the index suggest robust buying across the market, while sharp up‑moves driven by just a handful of heavyweights hint at fragility beneath the surface. Many fund managers therefore use the index as a benchmark, and index funds or ETFs based on it are common tools for getting instant diversification in one step.
Zooming in with the NIFTY IT index
Where the NIFTY 500 offers width, the NIFTY IT index provides focus on a single, globally linked sector. This index tracks ten major IT and tech‑enabled services companies, including big software exporters and digital service providers. Because these firms earn a large share of their revenue in foreign currencies, the index often reacts quickly to changes in global growth, client technology spending, and rupee‑dollar moves, giving investors an early feel for how India’s export‑oriented services engine is doing.
Construction, reviews and what moves the NIFTY IT index
Only stocks already present in the NIFTY 500 and classified within the IT universe are eligible to enter this sectoral basket. The index is calculated using free‑float market capitalisation with caps on how much weight any single stock or the top three holdings can command, which stops one giant company from completely dominating the reading. Semi‑annual reviews shuffle constituents if eligibility changes, while factors such as global tech demand, domestic policy on digital infrastructure, interest‑rate trends and foreign fund flows all influence the day‑to‑day path of the NIFTY IT line on your screen.
Using broad and sectoral indices together
Comparing these standards side by side is the most useful way for a private trader to use them. If the NIFTY IT index is flat or falling while the NIFTY 500 share price is rising gradually, it may indicate that money is changing away from software producers and towards banks, manufacturing, or spending stories; the opposite trend indicates that tech is driving the market upward. It is easier to determine if your own assets are moving in line with or against the larger trend thanks to the fact that many platforms, including big providers like AngelOne, give both benchmarks with charts, sector details, and stock lists.




