Technical Analysis of Indian Equities by Nooresh

What is Nifty and What is your Target for Nifty ?

some details as per


S&P CNX Nifty is a well-diversified 50 stock index accounting for 24 sectors of the economy. It is
used for a variety of purposes such as benchmarking  fund portfolios, index based derivatives,
structured products, ETFs and index funds.

S&P CNX Nifty is based upon solid economic research and is well respected internationally as a
pioneering effort in better understanding how to make a stock market index.

S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is
a joint venture between NSE and CRISIL. IISL is India’s first specialized company focused upon
the index as a core product. IISL has a licensing and marketing agreement with Standard and
Poor’s (S&P), who are world leaders in index services. 
Market Representation:
S&P CNX Nifty stocks represent about 63.55% of the total free float market capitalization of the
universe of the stocks traded on NSE as on September 30, 2011.

S&P CNX Nifty is a diversified index, accurately reflecting overall market conditions. The reward to-risk ratio of S&P CNX Nifty is higher than other leading indices, making it a more attractive
portfolio hence offering similar returns, but at lesser risk.

Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs
faced when actually trading an index. For a stock to  qualify for possible inclusion into the S&P
CNX Nifty, it has to reliably have market impact cost of below 0.50 % when doing S&P CNX Nifty
trades of Rs. 20 million.


For more about the details you can download this file



Now over the last many weeks people have been trying to make a guess on where would Nifty go over the next 3-6 months which is also now being considered as a crucial time.


The best part is everybody is ready with a NIFTY target on downside but if i were to ask them about any stock and levels for then people are not ready with an answer. As a matter of fact Nifty has no existence and its just a statistic !!!


So what i suggest is let everyone of us come out with a possible target price in best/worst and panic level for each of the stock in Nifty 50. After this we would be able to get a fair idea of where Nifty should be in either of the cases.


Attached below is a file of Nifty weightages and price as of Dec 9 – 2011.


So how do we do it.


1) All one needs to do is change the expected price to your estimate on the stock in worst case. For example – If you think Reliance can go to 600 in panics – then change expected price to 600.


2) By default i have just put a 10% correction on all 50 stocks. This gives us a possible Nifty of 4383 but do we think all 50 stocks will fall exactly 10%. Every stock moves in its own way in panic or good times. ( For example i expect Cement stocks to be up 10% rather then down 10% – but the weightage is too small it may only make Nifty go up by 20 points 🙂


3) So lets go play with your expected price on all possible stocks.



Once this is done we would come out with a poll on Nifty levels. Although my initial view was to do a POLL to gauge reader views but i thought its better we at least understand what Nifty is and what we expect of the 50 stocks before we take the poll.


Also it would be nice if people would comment on this post with their views and also do the above exercise at least once.


Happy Investing,


Nooresh Merani

Article by Nooresh Merani

Nooresh has written 2799 articles.

You can follow Nooresh Tech on Facebook and Twitter here.

{ 7 comments… add one }
  • damodhar December 10, 2011, 20:52

    very very helpfull & knoweldgeble

  • kailash chaturvedi December 11, 2011, 08:39

    Nice article …right approach ..good one ..well done

  • Ritesh Singh December 11, 2011, 22:58

    NIFTY might reach 4300 momentarily, during high panic, such as those that can be created by a major European Bank default/French or Japanese downgrades/ High yields of Italian/French bonds coupled with a bad domestic news such as raising the Fiscal deficit to 5%, lowering GDP estimates, USD-INR reaching 54+ and Political instability. These events can have a cascading impact and can infact lead NIFTY to 4300, but then hopefully lots of smart money will come into the market because at that levels, you can’t expect the market to stay for long.

  • saurabh shankar December 13, 2011, 11:05

    Very Interesting. Ran the simulation and NIFTY should be around 4200 at panic levels.

  • Narendra August 19, 2012, 18:33

    I am not able to download the ‘Nifty Calculator’.
    May be I have ‘Office 2003’.
    Can you pl. suggest any remedial measure on my side to help me have the same saved/opened in my laptop.

    • Nooresh August 20, 2012, 21:47

      Just download a converter or mail me will send u a converted sheet.

  • DEEPAK January 5, 2016, 07:54



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