Are you looking to invest in the Indian stock market but don’t have time to research individual companies? Nifty ETFs might be your best bet. Exchange Traded Funds (ETF) that track the Nifty 50 index offer a low-cost, diversified, and efficient way to grow your wealth.
What is a Nifty ETF?
A Nifty ETF is a type of mutual fund that tracks the Nifty 50 index, which consists of 50 of the largest companies listed on the National Stock Exchange (NSE) of India.
Key Features:
- Diversification: Exposure to 50 top Indian companies.
- Liquidity: Traded like stocks on the NSE and BSE.
- Low Expense Ratios: Usually cheaper than active mutual funds.
Popular examples include:
- Nippon India Nifty 50 ETF
- ICICI Prudential Nifty Next 50 ETF
- SBI Nifty ETF
Why Invest in Nifty ETFs?
1. Simplicity: Investors get broad market exposure without having to pick individual stocks.
2. Cost-Effective: Lower management fees compared to traditional mutual funds.
3. Transparency: You know exactly what you’re investing in—Nifty 50 stocks.
4. Performance Tracking: Easy to compare returns with the index.
How to Start Investing in Nifty ETFs
Step 1: Open a Demat and Trading Account
You’ll need:
- PAN card
- Aadhaar card
- Bank account details
- Address and identity proof
Popular brokers include:
- Zerodha
- Groww
- Upstox
- ICICI Direct
Step 2: Choose the Right Nifty ETF
Compare:
- Tracking error
- Liquidity (daily trading volume)
- Expense ratio
Step 3: Place the Order
- Log into your trading account.
- Search for the ETF by name (e.g., NIFTYBEES).
- Select quantity and place a buy order at market or limit price.
Step 4: Monitor and Rebalance
Track performance periodically and consider rebalancing based on your financial goals.
Check out : How Multi Cap Funds Perform During Economic Downturns?
Real-Life Example: SIP in Nifty ETF
Rahul, a 30-year-old salaried employee, began investing ₹5,000 monthly in a Nifty 50 ETF in January 2020. Over five years, he not only benefited from market growth but also from rupee cost averaging during market dips.
- Total investment: ₹3,00,000
- Portfolio value in 2025: ₹4,10,000+
- Return: Approx. 13% CAGR*
*Returns are market-dependent and not guaranteed.
Best Nifty ETFs to Consider in 2025
| ETF Name | Expense Ratio | AUM | Liquidity |
|---|---|---|---|
| Nippon India Nifty 50 ETF | 0.05% | High | Very High |
| ICICI Prudential Nifty Next 50 ETF | 0.18% | Medium | High |
| SBI Nifty ETF | 0.07% | High | Medium |
Note: Check latest fund details before investing.
Risks of Investing in Nifty ETFs
- Market Risk: ETFs move with the Nifty index. If the market goes down, your investment can lose value.
- Tracking Error: Some ETFs might not perfectly mirror the index.
- Liquidity Risk: Lower traded ETFs might have wider bid-ask spreads.
Tips for First-Time Investors
1. Start Small: Invest a small amount initially to get familiar with how ETFs work.
2. Use SIPs (Systematic Investment Plans): Many platforms allow you to invest in ETFs via SIP.
3. Don’t Time the Market: Focus on long-term investing rather than trying to catch market highs and lows.
4. Diversify: Nifty ETFs provide diversification, but also consider other asset classes like gold or debt ETFs.
Taxation of Nifty ETFs in India
- Short-Term Capital Gains (STCG): 20% if held for less than 1 year.
- Long-Term Capital Gains (LTCG): 12.5% on gains exceeding Rs. 1 lakh per year.
Use tax harvesting strategies to optimize your post-tax returns.
Conclusion
Nifty ETFs are an excellent way to start your investment journey in the Indian stock market. They offer diversification, transparency, and ease of access—perfect for both beginners and experienced investors.
By understanding how to invest in Nifty ETFs, comparing available options, and staying consistent, you can take a smart step toward building long-term wealth.
Have questions about Nifty ETFs? Drop them in the comments or check out our beginner’s guide to stock market investing!
FAQ’s
Nifty ETFs are passively managed and have lower expense ratios. Mutual funds may outperform in the short term but have higher fees. ETFs work best for long-term, cost-conscious investors.
Nippon India Nifty 50 ETF and ICICI Prudential Nifty Next 50 ETF are popular for long-term wealth creation. Choose based on liquidity and tracking error.
A: Yes, many platforms like Zerodha and Groww now support SIPs in ETFs.
A: Yes, ETFs are regulated by SEBI and offer diversification. However, they still carry market risks.
MoneyMantra, is a passionate content creator with over 5 years of experience in writing about the intersection of technology, business, finance, education, and more. With a deep understanding of how these fields empower both individuals and businesses
