Index Funds in India: Nifty 50, Sensex, and Low-Cost Investing

In India, the most popular index funds track the Nifty 50 (top 50 companies on NSE) and the Sensex (top 30 companies on BSE). These indices include companies like Reliance, TCS, HDFC Bank, Infosys, and ITC — giving you instant exposure to India's largest and most profitable businesses through a single SIP.

The evidence is increasingly clear in India too: over any 10-year period, approximately 65-75% of actively managed large-cap funds underperform the Nifty 50 index after accounting for higher expense ratios. Active funds charge 1-2% annually; index funds charge as little as 0.1-0.2%. That fee difference, compounded over 20-30 years, represents lakhs in lost wealth.

Popular Indian index funds include UTI Nifty 50 Index Fund (one of the oldest and largest), HDFC Index Fund Nifty 50, and Motilal Oswal Nifty 500 Index Fund. For broader exposure, the Nifty Next 50 captures the next tier of growing companies. All are available as direct plans with expense ratios below 0.2%.

For most Indian investors, a portfolio of 2-3 index funds — a Nifty 50 fund, a Nifty Next 50 fund, and perhaps an international index fund (tracking S&P 500) — provides excellent diversification at minimal cost. Start a SIP of even ₹500/month on Groww, Zerodha, or any AMFI-registered platform.

Index funds are available as both traditional mutual funds (bought via AMC website or apps) and ETFs (traded on NSE/BSE through a demat account). For SIP investors, the mutual fund route is simpler as ETFs require a demat account and manual purchases.