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Top Ways to invest in NIFTY

Top Ways to invest in NIFTY
June 28, 2018 Simon Hopes

Knowing the advantages of something is not beneficial if you are not going to do anything about it. This basic truth holds true across all walks of life, including economics and the role your finances play into it. Trading in the stock market surely comes in with a bunch of benefits for you to reap.

Nifty essentially is a benchmark to indicate the stock market index for NSE. And for those of you who did not know it, it makes up for about a total of 50% of the total traded stocks in NSE (National Stock Exchange). In simpler terms, it basically is what calculates the performance of the NSE. Clearly, it is a reflection of the Indian economy. Which means if Nifty goes up, the market is cruising up high, as it should and vice versa.

Though many people usually assume that investing in this index is the same as investing in NSE, it isn’t really the case. By investing in Nifty, you have the potential of benefitting from the entire diversified portfolio of 50 stocks. This makes Nifty a good option to invest in. And here’s how you do that.

  1. Spot trading

The easiest way to invest in Nifty is by purchasing Nifty Script. This is equivalent to purchasing equity shares of companies that are listed. Once you purchase the stock, you are eligible to benefit from the capital gains that come out of the price movement of the index.

  1. Nifty futures

Being privy to Future contracts is common. What it really means is that it is an agreement between the buyer and the seller for buying and selling of Nifty on a future date. During the period, if the price really does go up, you can sell them and earn the difference. And if the price goes down, you can wait till the decided settlement date.

  1. Index funds

It is the sort of mutual fund with a portfolio which is designed to match or trace the components of market index. This provides a wider market exposure. Such funds invest on various indices, which include Nifty.

  1. Nifty options

When it comes to an option contract, the contract is between the buyer and the seller for buying and selling stock of a Nifty on a future date and at a specific price, too. The buyer of the Call option contract pays a certain amount as premium and obtains the legal right but not the obligation to purchase or sell Nifty in the future if the price is to his/her advantage.

  1. Derivative trading

Derivatives are nothing but financial contracts that derive value from an underlying asset. These assets could be anything – stocks, indices, commodities, currencies, anything.

The stock market has grown over the years. This growth has attracted the attention if investors (foreign and institutional). They are investing in the market, directly or through index funds, but they are definitely doing that. This makes the stock market a lucrative investment proposition for investors who are looking to invest in the index.