In the United States, the term Nifty Fifty was an informal designation for fifty popular large-cap stocks on the New York Stock Exchange in the 1960s and 1970s that were widely regarded as solid buy and hold growth stocks, or “Blue-chip” stocks.
These fifty stocks are credited by historians with propelling the bull market of the early 1970s, while their subsequent crash and underperformance through the early 1980s are an example of what may occur following a period during which many investors, influenced by a positive market sentiment, ignore fundamental stock valuation metrics. Most have since recovered and are solid performers, although a few are now defunct or otherwise worthless.
In India, the term NIFTY 50 refers to the diversified stock index of the National stock exchange, consisting of 50 stocks that represent 12 sectors of the Indian economy. It is one of the two main benchmarking indices in India, along with the BSE Sensex.
U.S. Bear market of the 1970s
The long bear market of the 1970s which began with the 1973–74 stock market crash and lasted until 1982 caused valuations of the nifty fifty to fall to low levels along with the rest of the market, with most of these stocks under-performing the broader market averages. A notable exception was Wal-Mart, the best performing stock on the list, with a 29.65% compounded annualized return over a 29-year period.
Because of the under-performance of most of the nifty fifty list, it is often cited as an example of unrealistic investor expectations for growth stocks.
The stocks were often described as “one-decision”, as they were viewed as extremely stable, even over long periods of time.
The most common characteristic by the constituents were solid earnings growth for which these stocks were assigned extraordinary high price–earnings ratios. Fifty times earnings, far above the long-term market average, was common.
NYSE Nifty Fifty constituents
Note: There is no official version of companies composing the list.
- American Home Products
- AMP Inc.
- Avon Products
- Baxter International
- Black & Decker
- Burroughs Corporation
- The Coca-Cola Company
- Digital Equipment Corporation
- Dow Chemical
- Eastman Kodak
- Eli Lilly and Company
- Emery Air Freight
- First National City Bank
- General Electric
- International Flavors and Fragrances
- International Telephone and Telegraph
- Johnson & Johnson
- Louisiana Land & Exploration
- Minnesota Mining and Manufacturing (3M)
- Merck & Co.
- MGIC Investment Corporation
- Philip Morris Cos.
- Procter & Gamble
- Schering Plough
- Joseph Schlitz Brewing Company
- Sears, Roebuck and Company
- Simplicity Pattern
- S. Kresge
- Texas Instruments
- The Walt Disney Company
- ^ Jump up to:ab c Fesenmaier, Jeff; Smith, Gary. “The Nifty-Fifty Re-Revisited”. Retrieved 2012-02-05.
- ^“Broadmarket indices – NIFTY 50 Index”. https://nseindia.com. NSE – National stock exchange (official website). Retrieved 29 November 2017. External link in |website= (help)
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.