Sharekhan Blog

How To Invest In Nifty Index Fund Directly?

  • Jan 29, 2024

Investors who would rather avoid high-risk bets but still want exposure to equity markets could consider investing in Nifty Index Funds.Having said that, before understanding how to invest in Nifty 50 Index mutual funds, investors must completely understand the premise of this investment tool.

Index Fund: An Overview

Mutual fund plans known as index mutual funds in India follow stock market indices, including the Nifty 50. As stated differently, an index fund makes investments in the equities that comprise a specific market index. Additionally, each stock's weightage corresponds exactly to its percentage within the index.

Fund managers adjust the weighting of the portfolio's components to match the weight of a certain index they track if the amount of any stock changes. Nifty 50 Index Fund is an instance of this supposedly well-liked financial instrument.

Nifty 50 Index Fund: What Is It?

In essence, a Nifty index fund is a mutual fund in which your investment is made in the equities of the Nifty index businesses.

Investing in the best Nifty index fund is similar to buying a mutual fund instead of a stock. The components of the Nifty index fund are precisely matched with the companies in the Nifty 50 index. The fund tracks index performance regardless of market conditions because it replicates the Nifty 50 index.

Why Invest In NIFTY Index Fund

Some advantages of Nifty Index funds over regular mutual funds and single stocks are listed below.

Reduced Risk

The equities in Nifty Index Funds are the same as those in the Nifty 50 Index, giving you more market exposure, efficient portfolio diversification, and reduced risk. It is not significantly impacted by poor performance in any one sector because it works in nearly every major industry and sector in the market.

Consistent Returns

With this money, there is infinite possibility for future growth and more steady profits.

Elimination of Bias

When investing in a Nifty index fund, there is no emotional bias. The stock portfolio was chosen objectively because this fund tracks the Nifty index.

How To Invest In A Nifty Index Fund Directly

Following this step-by-step guide, you can invest directly in a Nifty index fund.

Step 1: First, register for a trading and Demat account on the website of one of the top stockbrokers. Investing in the Nifty Index Fund requires doing this.

Step 2: To open your trading and Demat account, complete the application and follow the instructions. We'll ask you for personal and professional information on this application form. Important paperwork such as identification proof (PAN card and Aadhar card), proof of age, proof of income, and proof of address must also be uploaded to finish the KYC procedure.

Step 3: Your stockbroker will handle your application to open a trading and demat account once your KYC verification is successful.

Step 4: You will receive a special user ID and password after completing the application procedure successfully. Using this, you can access your stockbroker's trading platform.

Step 5: Select the best Nifty index fund direct growth by going to the mutual fund area of the trading interface after logging in. Doing thorough research on a Nifty index fund's performance and track record is a smart idea before choosing one. Make sure you go through all of the documentation about the scheme.

Step 6: After selecting a Nifty index fund, you have two options: you can begin a Systematic Investment Plan (SIP) or purchase fund units outright with a single, lump sum payment.

Different Ways To Invest In NIFTY 50

There are numerous strategies to invest in NIFTY 50 equities. The following are a few of them:

NIFTY 50 Investment Via ETF

An easy approach to invest in the NIFTY 50 index is through NIFTY 50 ETFs. These ETFs are available for purchase and sale like any other stock exchange stock. They want to expose investors to the whole index through a single asset, emulating the performance of the NIFTY 50 index.

NIFTY 50 Investment Via Index Funds

Index funds are an additional means of investing in the NIFTY 50. Mutual funds, known as index funds, follow the performance of the NIFTY 50. NIFTY 50 index funds aim to mimic the NIFTY 50 index performance by investing in the same 50 stocks.

NIFTY 50 Investment Via Derivatives

Derivatives like futures and options also allow you to invest in the NIFTY 50 market. Contracts that draw their value from an underlying asset—in this case, the NIFTY 50 index—are known as derivatives. On the other hand, investing in derivatives might be considered riskier and more complex than investing in index funds or ETFs.


Putting money into a performing Nifty Index Fund will boost your chances of reaching your financial goals considerably faster. You don't need to worry about managing the fund if you are not knowledgeable about the stock market. Your fund manager will competently and passively manage it.

All you have to do is put money into it, then take a seat back and reap the rewards of building up your savings in this fund.

Team Sharekhan
by Team Sharekhan

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