For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

Value Stocks Now Lucrative: Nifty 50 Value 20 Index Performed Better Than Nifty

|

Stock market veterans have been advocating value investing which works on choosing stocks basis some of the parameters such as low price to earnings ratio, low price to book value, low prices to cash flow etc. In fact in the last one year, Nifty 50 Value 20 index has gained and provided higher returns than the Nifty index.

 

Nifty 50 Value 20 index and its performance

Nifty 50 Value 20 index and its performance

The Nifty 50 Value 20 index reflects the behavior as well as performance of a diversified group of value companies that are part of the Nifty 50 index. Perhaps it is a mix of the 20 highly liquid companies that forms the part of the NSE. These are typically blue chip companies.

Index Returns (%)QTDYTD1 Year5 YearsSince Inception
Price Return 8.17 17.89 61.70 17.19 18.17
Total Return 8.85 19.37 65.51 19.57 20.46

Index' existence
 

Index' existence

The index calculation was first done in January 2009. At the time of rebalancing of shares/ change in index constituents/ change in investable weight factors (IWFs), the weightage of the index constituent (wherever applicable) is capped at 15%. Weightage of such stock may increase beyond 15% between the rebalancing periods. NIFTY50 Value 20 Index can be used for a variety of purposes such as benchmarking fund portfolios, issuance of index funds, ETFs and structured products.

Company's Name Weight(%)

Top constituents by weightage

Infosys Ltd. 15.13

Tata Consultancy Services Ltd. 14.91

Hindustan Unilever Ltd. 10.50

Larsen & Toubro Ltd. 8.62

ITC Ltd. 8.43

HCL Technologies Ltd. 5.08

Wipro Ltd. 3.84

Sun Pharmaceutical Industries Ltd. 3.47

Tech Mahindra Ltd. 3.23

JSW Steel Ltd. 3.15

Nifty 500 Value 50 index

Nifty 500 Value 50 index

Likewise there is another index Nifty 500 Value 50 Index which trades at a P/E of 9.3 with a dividend yield of 2.9% as against Nifty 50 that trades at a P/E of 28.3 with a dividend yield of 1.3 per cent.

Typically this index includes 50 companies from its parent Nifty 500 index that are selected based on their value scores. The value score for each company is determined based on Earnings to Price ratio (E/P), Book Value to Price ratio (B/P), Sales to Price ratio (S/P) and Dividend Yield.

Index Returns (%)QTDYTD1 Year5 YearsSince Inception
Price Return 17.82 41.76 90.35 8.23 11.11
Total Return 18.20 43.72 94.61 11.13 14.11

Top stocks that form the part of Nifty 500 Value 50 index by weightage

Top stocks that form the part of Nifty 500 Value 50 index by weightage

NTPC Ltd. 5.02

Tata Steel Ltd. 5.01

Tata Motors Ltd. 5.00

Bharat Petroleum Corporation Ltd. 4.98

Grasim Industries Ltd. 4.98

Hindalco Industries Ltd. 4.95

Coal India Ltd. 4.93

Oil & Natural Gas Corporation Ltd. 4.87

Indian Oil Corporation Ltd. 4.85

Tata Chemicals Ltd. 4.30

Why are value stocks becoming attractive?

Why are value stocks becoming attractive?

Value stocks are currently available at cheaper than their growth counterparts and are perhaps deemed to have predicable business model, earnings which tend to generate moderate earnings over time. Sometimes the companies showing a downward trend in price may be providing value and understanding its future price potential. If we look at the top constituents of the Nifty 500 Value 50 index they typically comprise prominent public sector companies such as IOC, BPCL, Coal India, ONGC, NTPC etc.

Not only the Nifty index, the Nifty 500 Value index has also pipped the quality index Nifty200 Quality 30 index with respect to absolute returns.

So, you as an investor can definitely be considering value stocks such as BPCL i.e. divestment bound and for such value stocks that during last some years were not that appealing they can now give good enough returns to investors over the course of 2-3 years in terms of percentage growth.

Other value stocks that may give reasonable upside to investors are the PSB stock of SBI and HPCL among others.

How to find value stocks India/ undervalued stocks?

How to find value stocks India/ undervalued stocks?

Low Price/Earnings (P/E) ratio: It is typically computed as stock's current price and earnings per share for a 12-month period. So, undervalued stocks are typically with lower P/E and

Low price/earnings growth (PEG) ratio: Better metric than P/E, it is a valuation parameter that helps to know the relative trade-off between the price of a stock, the earnings generated per share (EPS) and the company's expected growth.

PEG ratio: P/E ratio/ Earnings growth rate, and in a case if this value is less than 1 preference can be given more to past performance than future prospects of the stock.

Low price to book ratio: The company's low price to book value is an important valuation metric i.e. known by the determining the company's current market value in comparison to its book value. Current market value is based on the pricing of the company's outstanding shares while the book value is what is left if the company is liquidated. The company with low price to book value also implies a under valued stock.

Another important characteristic of value stocks is that they do not show high fluctuations in both market highs as well as lows. Also, importantly high dividend yield is another integral factor which determines the value stock.

GoodReturns.in

Read more about: investments value stocks
Company Search
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X