Nifty Next 50 vs Nifty 50 Index Fund: Return Comparison
Once investors have a Nifty 50 index fund, the next question is usually whether to add, or switch to, a Nifty Next 50 index fund. The Nifty Next 50 vs Nifty 50 index fund comparison has become sharper in 2026 than in any recent year, because the two have moved in opposite directions.
As of September 30, 2026, the Nifty 50 Total Return Index was down 12.6% for the year, in what has been Indian large caps’ weakest year in a decade. The Nifty Next 50 Total Return Index was up 1.4% over the same period. Over 5 years, the Nifty Next 50 has delivered 11.4% a year against 6.4% for the Nifty 50. But the Nifty Next 50 also lost money in 2018, lagged far behind in 2019 and 2025, and swings harder in both directions.
In this guide, we compare the two using the latest NSE factsheets and actual fund NAVs: what each index holds, sector mix, trailing and calendar-year returns, risk, valuation, cost and tax. We then run a real 10-year SIP through each, and through a 70:30 combination, to show what the difference means in rupees.
Nifty Next 50 vs Nifty 50 Index Fund
| Factor | Nifty 50 Index Fund | Nifty Next 50 Index Fund |
|---|---|---|
| What it holds | India’s 50 largest, most liquid companies | The next 50 companies in the Nifty 100 (ranks roughly 51 to 100) |
| Top 10 stocks’ weight | About 52% | About 34% |
| Largest stock | HDFC Bank, 10.4% | Divi’s Laboratories, 4.8% |
| Largest sector | Financial services, 37.5% | Capital goods, 20.3% |
| 2026 return (to Sep 30, TRI) | -12.6% | +1.4% |
| 1-year return (TRI) | -7.1% | +3.7% |
| 5-year return (TRI, annualised) | 6.4% | 11.4% |
| 10-year return (index fund, annualised) | About 11.1% | About 12.3% |
| Volatility (5-year, annualised) | 13.8% | 17.9% |
| Beta vs Nifty 50 (5-year) | 1.00 | 1.07 |
| P/E ratio | 19.4 | 18.3 |
| Expense ratio (direct, large funds) | 0.24% to 0.29% | 0.39% to 0.46% |
| SEBI category | Large cap | Large cap |
| Tax | Equity taxation | Equity taxation |
Index figures are from the NSE factsheets dated September 30, 2026. Fund figures use NAVs of direct growth plans to September 30, 2026, and expense ratios as of mid-October 2026.
In short: the Nifty Next 50 has given higher returns over most long periods, with more volatility, deeper falls and higher costs. The Nifty 50 is steadier, cheaper and more concentrated in a few banks and conglomerates.
What the Nifty 50 and Nifty Next 50 Are
The two indices together make up the Nifty 100, the 100 largest companies on NSE.
- Nifty 50: The top 50 of these by free-float market capitalisation, subject to liquidity and F&O eligibility. Launched in 1996.
- Nifty Next 50: The remaining 50 companies of the Nifty 100 after excluding the Nifty 50. Launched in December 1996. It was once called the CNX Nifty Junior.
Both are large-cap indices under SEBI’s scheme categorisation rules, which define large-cap companies as the top 100 by full market capitalisation. But the Nifty Next 50’s companies sit at the smaller end of that group, so it often behaves more like a bridge between large caps and midcaps.
A few methodology points matter for investors:
- Both rebalance semi-annually, with cut-off dates of January 31 and July 31 and changes taking effect at the end of March and September.
- The Nifty Next 50 is a feeder for the Nifty 50. Companies that grow move up; companies that shrink move down. On September 30, 2026, BSE Ltd moved up into the Nifty 50, and Wipro moved down to the Nifty Next 50.
- Capping rules in the Nifty Next 50: Stocks outside the F&O segment are capped at 4.5% each and 10% in total at quarterly rebalances. The Nifty 50 has no such cap, since all its stocks must be in F&O.
That feeder relationship is one reason the Nifty Next 50 has historically done well over long periods: it holds companies on their way to becoming India’s largest. It is also why it can be more volatile: it also holds companies that have fallen out of the top 50.
Difference 1: Company Size, Constituents and Concentration
The Nifty 50 is dominated by a handful of giants. The Nifty Next 50 is spread much more evenly.
| Concentration measure | Nifty 50 | Nifty Next 50 |
|---|---|---|
| Largest stock | HDFC Bank, 10.4% | Divi’s Laboratories, 4.8% |
| Top 5 stocks | About 36% | About 20% |
| Top 10 stocks | About 52% | About 34% |
| Stocks below 3% weight | Most of the 50 | Almost all except the top 5 |
Top 10 holdings (September 30, 2026)
| Nifty 50 | Weight | Nifty Next 50 | Weight |
|---|---|---|---|
| HDFC Bank | 10.38% | Divi’s Laboratories | 4.84% |
| ICICI Bank | 9.05% | TVS Motor Company | 3.95% |
| Reliance Industries | 7.58% | Hindustan Aeronautics | 3.63% |
| Bharti Airtel | 5.10% | Tata Motors | 3.61% |
| Larsen & Toubro | 4.20% | Adani Power | 3.48% |
| State Bank of India | 3.79% | Samvardhana Motherson | 2.95% |
| Axis Bank | 3.37% | Torrent Pharmaceuticals | 2.89% |
| Infosys | 3.35% | Cholamandalam Investment and Finance | 2.88% |
| Kotak Mahindra Bank | 2.93% | Vedanta Aluminium Metal | 2.87% |
| Mahindra & Mahindra | 2.52% | Cummins India | 2.63% |
The two lists have no overlap at all. By definition, the indices never hold the same company, so combining them gives you the full Nifty 100.
What this means in practice: In a Nifty 50 fund, the fate of three or four companies drives much of your return. In a Nifty Next 50 fund, no single company carries much weight, but the companies themselves are smaller and individually more volatile.
Difference 2: Sector Mix
The sector difference explains much of the 2026 gap. The Nifty 50 is a bet on banks, energy and IT. The Nifty Next 50 is a bet on capital goods, power, autos, healthcare and metals.
| Sector (NSE classification) | Nifty 50 | Nifty Next 50 |
|---|---|---|
| Financial services | 37.45% | 17.65% |
| Capital goods | 1.33% | 20.25% |
| Oil, gas and consumable fuels | 9.39% | 6.44% |
| Information technology | 7.52% | 3.30% |
| Automobile and auto components | 6.65% | 9.76% |
| Power | 2.59% | 9.46% |
| Healthcare | 4.74% | 8.91% |
| Metals and mining | 4.86% | 7.57% |
| FMCG | 5.50% | 6.15% |
| Telecommunication | 5.10% | 1.46% |
| Chemicals | Nil | 3.83% |
| Realty | Nil | 1.77% |
Source: NSE factsheets dated September 30, 2026.
In 2026, large private banks and IT companies have been under pressure from heavy foreign investor selling and, for IT, concerns about AI-driven disruption. The Nifty 50 holds about 45% in these two sectors combined. The Nifty Next 50 holds about 21%, and is instead heavy in capital goods, defence, power and pharma. As a whole, it has held up far better this year.
What this means in practice: The two indices are not just “bigger” and “smaller” versions of the same market. They give you exposure to different parts of the economy, which is why their returns can diverge so sharply in a single year.
Difference 3: Trailing Returns, Latest Data
Index returns (Total Return Index, as of September 30, 2026)
| Period | Nifty 50 TRI | Nifty Next 50 TRI | Gap |
|---|---|---|---|
| 2026 so far (YTD) | -12.61% | +1.37% | Next 50 ahead by about 14% |
| 1 year | -7.09% | +3.74% | Next 50 ahead by about 11% |
| 5 years (annualised) | 6.38% | 11.44% | Next 50 ahead by about 5% a year |
Index fund returns (direct plans, annualised for periods over 1 year, as of September 30, 2026)
| Period | Nifty 50 index funds | Nifty Next 50 index funds |
|---|---|---|
| 1 year | -7.25% to -7.33% | +3.24% to +3.45% |
| 3 years | 5.8% | 16.0% to 16.3% |
| 5 years | 6.1% | 10.9% to 11.1% |
| 7 years | 11.1% to 11.2% | 14.5% to 14.8% |
| 10 years | 11.0% to 11.2% | 12.3% |
Nifty 50 funds: UTI, HDFC, ICICI Prudential and SBI. Nifty Next 50 funds: ICICI Prudential, UTI, DSP, SBI, HDFC and Motilal Oswal; only ICICI Prudential’s has a 10-year record.
The Nifty Next 50 is ahead over every trailing period shown, by a wide margin over 3 and 5 years. Over 10 years the gap narrows to about 1.2% a year, because the Nifty Next 50 had several weak years in between. The next section shows those years.
Calendar-Year Returns: The Boom and Bust Pattern
Trailing returns hide how bumpy the ride has been. Here are calendar-year returns of two long-running direct index funds.
| Year | UTI Nifty 50 Index Fund | ICICI Prudential Nifty Next 50 Index Fund | Winner |
|---|---|---|---|
| 2014 | 32.0% | 44.2% | Next 50 |
| 2015 | -3.2% | 6.7% | Next 50 |
| 2016 | 4.1% | 8.2% | Next 50 |
| 2017 | 29.8% | 46.2% | Next 50 |
| 2018 | 4.3% | -8.4% | Nifty 50 |
| 2019 | 13.3% | 1.0% | Nifty 50 |
| 2020 | 15.6% | 14.7% | Nifty 50 (narrowly) |
| 2021 | 25.3% | 30.1% | Next 50 |
| 2022 | 5.4% | 0.5% | Nifty 50 |
| 2023 | 21.0% | 26.8% | Next 50 |
| 2024 | 9.8% | 27.5% | Next 50 |
| 2025 | 11.7% | 2.5% | Nifty 50 |
| 2026 (to Sep 30) | -12.7% | 0.9% | Next 50 |
Three patterns stand out:
- The Nifty Next 50 wins big in strong, broad markets such as 2014, 2017 and 2024, often by 15 percentage points or more.
- It lags badly when the market narrows to a few large companies, as in 2018 and 2019, or after a sharp run-up, as in 2025.
- It does not always fall more in a weak market. In 2026, the Nifty 50 has fallen while the Nifty Next 50 is slightly positive, with much of the pressure falling on the large banks and IT companies that dominate the Nifty 50.
Over these 12 full years, the Nifty Next 50 won 7 and the Nifty 50 won 5. The winning margins of the Nifty Next 50 were usually larger, which is why it comes out ahead over long periods.
Difference 4: Risk, Volatility and Drawdowns
Higher returns have come with higher risk. Every measure points the same way.
| Risk measure | Nifty 50 | Nifty Next 50 |
|---|---|---|
| Volatility, 1 year (index) | 13.4% | 17.1% |
| Volatility, 5 years (index) | 13.8% | 17.9% |
| Volatility since inception (index) | 22.4% | 25.3% |
| Beta vs Nifty 50 (5 years) | 1.00 | 1.07 |
| Volatility, 10 years (index fund) | 16.3% | 18.2% |
| Worst fall in last 10 years (index fund) | About -38% (January to March 2020) | About -41% (January 2018 to March 2020) |
| Fall during 2018 to 2019 | About -14% | About -20% |
| Fall from September 2024 peak to early 2025 low | About -16% | About -27% |
| Distance from all-time high (Sep 30, 2026) | About -13% | About -10% |
Index volatility and beta are from the NSE factsheets; fund figures are calculated from daily NAVs of UTI Nifty 50 and ICICI Prudential Nifty Next 50 index funds.
The most telling number is the worst fall. The Nifty 50’s biggest decline in the last decade came only in the COVID crash of 2020 and recovered within months. The Nifty Next 50’s worst drawdown lasted more than two years, from the January 2018 peak to the March 2020 low, testing the patience of anyone who invested at the top.
What this means in practice: A Nifty Next 50 fund suits investors who can hold through a 2 to 3 year stretch of poor returns without stopping SIPs or switching out. If you are likely to panic in a deep fall, the Nifty 50’s steadier path is easier to live with.
Valuation: How Expensive Is Each Index Now?
After 2026’s divergence, the valuation picture has shifted.
| Measure (September 30, 2026) | Nifty 50 | Nifty Next 50 |
|---|---|---|
| Price to earnings (P/E) | 19.36 | 18.28 |
| Price to book (P/B) | 2.78 | 3.35 |
| Dividend yield | 1.22% | 1.04% |
Source: NSE factsheets.
On earnings, the Nifty Next 50 now trades at a slightly lower multiple than the Nifty 50. Historically, it has often traded at a premium, so this is unusual. On book value, the Nifty Next 50 is still more expensive, because it holds fewer banks (which typically trade at lower price-to-book) and more capital goods and pharma companies (which trade at higher multiples).
The Nifty 50’s P/E of about 19 is noticeably lower than its levels of recent years, after the 2026 fall.
Valuations are a poor guide to short-term returns. They do suggest that neither index is at an extreme today, and that the 2026 fall has made Nifty 50 valuations more reasonable than they were a year ago.
Difference 5: Expense Ratio, Tracking and Fund Options
Nifty Next 50 index funds cost noticeably more than Nifty 50 funds, because the stocks are less liquid and the index churns more.
Expense ratios and size of direct plans (mid-October 2026)
| Fund | Expense ratio | AUM (approx.) |
|---|---|---|
| UTI Nifty 50 Index Fund | 0.25% | Rs. 28,100 crore |
| HDFC Nifty 50 Index Fund | 0.29% | Rs. 22,200 crore |
| ICICI Prudential Nifty 50 Index Fund | 0.24% | Rs. 16,300 crore |
| SBI Nifty Index Fund | 0.24% | Rs. 13,200 crore |
| ICICI Prudential Nifty Next 50 Index Fund | 0.41% | Rs. 9,700 crore |
| UTI Nifty Next 50 Index Fund | 0.46% | Rs. 7,300 crore |
| HDFC Nifty Next 50 Index Fund | 0.40% | Rs. 2,600 crore |
| SBI Nifty Next 50 Index Fund | 0.43% | Rs. 2,300 crore |
| DSP Nifty Next 50 Index Fund | 0.39% | Rs. 1,350 crore |
| Motilal Oswal Nifty Next 50 Index Fund | 0.45% | Rs. 510 crore |
Expense ratios shown include statutory levies; the base expense ratio is lower (about 0.16% to 0.22% for the Nifty 50 funds and 0.24% to 0.31% for the Nifty Next 50 funds). Check the latest factsheet before investing.
Tracking. Over the year to September 30, 2026, the Nifty Next 50 TRI returned 3.74%, while the funds returned 3.24% to 3.45%, a tracking difference of about 0.3% to 0.5%. For Nifty 50 funds, the gap was about 0.16% to 0.24%. Nifty Next 50 funds also typically report higher tracking error.
What this means in practice: The Nifty Next 50 costs about 0.15% to 0.2% a year more. That is small compared with the return differences between the two indices, but within the Nifty Next 50 category it is worth picking a larger fund with a low expense ratio and low tracking difference. ETFs on both indices are also available for investors with a demat account.
Tax: Identical Treatment
Both are equity-oriented funds, so tax should not influence the choice.
- Held over 12 months: Long-term capital gains taxed at 12.5% on gains above Rs. 1.25 lakh in a financial year.
- Held 12 months or less: Short-term capital gains taxed at 20%.
- No TDS on redemption for resident individuals.
- No deduction on investment under either tax regime.
One practical point: switching from a Nifty 50 fund to a Nifty Next 50 fund, or back, is a redemption and triggers capital gains tax. Rather than switching existing money, it is usually better to direct new SIPs to the fund you want to add.
For how capital gains fit into your overall tax, see our income tax slabs FY 2026-27 guide and our complete income tax guide for India.
Worked Example: Actual Rs. 10,000 Monthly SIP
Rohit, 35, a chartered accountant in Hyderabad, wants to see what a Rs. 10,000 monthly SIP would actually have delivered in each fund, and in a 70:30 combination. These results use real NAVs of UTI Nifty 50 Index Fund and ICICI Prudential Nifty Next 50 Index Fund (direct plans), with the SIP on the first working day of each month and values as of September 30, 2026.
10-year SIP (October 2016 to September 2026)
| Nifty 50 fund | Nifty Next 50 fund | 70% Nifty 50 + 30% Next 50 | |
|---|---|---|---|
| Total invested | Rs. 12.0 lakh | Rs. 12.0 lakh | Rs. 12.0 lakh |
| Value on Sep 30, 2026 | Rs. 20.08 lakh | Rs. 23.38 lakh | Rs. 21.07 lakh |
| SIP return (XIRR) | 9.9% | 12.8% | 10.8% |
5-year SIP (October 2021 to September 2026)
| Nifty 50 fund | Nifty Next 50 fund | 70% Nifty 50 + 30% Next 50 | |
|---|---|---|---|
| Total invested | Rs. 6.0 lakh | Rs. 6.0 lakh | Rs. 6.0 lakh |
| Value on Sep 30, 2026 | Rs. 6.70 lakh | Rs. 8.01 lakh | Rs. 7.09 lakh |
| SIP return (XIRR) | 4.4% | 11.5% | 6.6% |
What the numbers show:
- Over 10 years, the Nifty Next 50 SIP ended about Rs. 3.3 lakh, or 16%, higher than the Nifty 50 SIP.
- The 70:30 combination added about Rs. 1 lakh over the pure Nifty 50 SIP, while keeping most of the money in the steadier index.
- These results are measured at a point when the Nifty 50 is near a 2026 low and the Nifty Next 50 has held up, which flatters the Next 50. Measured at the end of 2019, after two bad years for the Next 50, the comparison would have looked very different.
Past returns do not guarantee future returns. The gap between the two can narrow or reverse over the next decade.
Which to Choose, and How to Combine
For most investors, this is not an either-or choice. The two indices complement each other: no overlap, different sectors, different behaviour.
| Your situation | Suggested approach | Why |
|---|---|---|
| First equity investment, or low tolerance for volatility | Nifty 50 only | Steadier, cheaper, simplest core holding |
| Long horizon (10+ years), can hold through 2 to 3 bad years | Nifty 50 core plus 20% to 40% in Nifty Next 50 | Adds growth potential and sector diversity |
| Already hold a Nifty 50 fund | Add Nifty Next 50 through new SIPs, do not switch | Avoids capital gains tax; builds the Nifty 100 together |
| Want the simplest way to own both | A single Nifty 100 index fund | Holds both indices in market-cap proportion |
| Short horizon (under 5 years) | Neither as the main holding | Both can fall 30% or more |
| Chasing 2026’s outperformance | Wait and decide on allocation, not recent returns | The Next 50’s leadership has reversed before, as in 2018 and 2025 |
The short answer: The Nifty 50 is the better first index fund for most salaried investors. The Nifty Next 50 is a strong second fund for those with a long horizon and the patience to sit through deeper falls. In the 10-year example above, a 70:30 split captured part of the Next 50’s extra return while keeping most of the money in the steadier index.
If you are planning SIPs alongside tax planning, our tax saving tips for salaried employees and old vs new tax regime comparison help you see the full picture.
Common Mistakes to Avoid
- Switching everything to the Nifty Next 50 after a strong year. The Next 50 followed its 27.5% gain in 2024 with just 2.5% in 2025. Leadership changes, and every switch can trigger capital gains tax.
- Treating the Nifty Next 50 as a large-cap “safe” fund. Its worst fall in the last decade was about 41%, and it took over two years to bottom out.
- Stopping SIPs during a drawdown. The Next 50’s long-term edge depends on staying invested through its bad years.
- Ignoring cost differences within the category. Nifty Next 50 funds range from about 0.39% to 0.46% in direct plans; pick a large, low-cost fund.
- Comparing fund returns with the price index. Compare with the Total Return Index, which includes dividends.
- Holding a Nifty 100 fund and separate Nifty 50 and Next 50 funds. That is the same set of stocks three times.
- Using either fund for money needed within 3 to 5 years. Both can fall sharply at the wrong time.
Frequently Asked Questions
Is Nifty Next 50 better than Nifty 50 in 2026?
So far in 2026, yes: as of September 30, the Nifty Next 50 TRI was up 1.4% while the Nifty 50 TRI was down 12.6%. Over 5 years, the Nifty Next 50 returned 11.4% a year against 6.4%. But it is more volatile and has had long stretches of underperformance, such as 2018 and 2019.
Why has the Nifty Next 50 outperformed the Nifty 50 in 2026?
The Nifty 50 holds about 45% in financial services and IT, which have been under pressure this year. The Nifty Next 50 holds more capital goods, power, autos, healthcare and metals, and no single stock is above 5% of the index.
Is the Nifty Next 50 riskier than the Nifty 50?
Yes. Its 5-year volatility is about 17.9% against 13.8% for the Nifty 50, its beta is about 1.07, and its worst fall in the last decade was deeper and lasted longer.
Do Nifty 50 and Nifty Next 50 index funds overlap?
No. The two indices never hold the same company. Together they form the Nifty 100.
How much should I put in a Nifty Next 50 fund?
There is no fixed rule. Many investors keep the Nifty 50 as the core and add 20% to 40% in the Nifty Next 50 if they have a long horizon and can tolerate deeper falls.
Is Nifty Next 50 a large-cap or midcap fund?
It is a large-cap index under SEBI’s classification, since its companies rank roughly 51 to 100 by market capitalisation. It behaves somewhat between large caps and midcaps.
Which costs more, a Nifty 50 or Nifty Next 50 index fund?
Nifty Next 50 funds cost more: about 0.39% to 0.46% in direct plans, against 0.24% to 0.29% for large Nifty 50 funds.
