The Nifty 50 staged a strong rebound on Thursday, ending the session 0.55% higher at 24,211 after snapping its seven-session losing streak. The Sensex gained 0.75% to settle at 77,488, while broader markets also closed in the green with the Nifty Smallcap 100 rising 0.67% and the Nifty Midcap 100 advancing 0.50%. According to latest reports, the recovery was supported by strong buying interest in banking and NBFC stocks, coupled with gains in FMCG and technology shares. The positive momentum comes after the index had jumped 154 points to 24,232 on August 20, with market breadth remaining positive as 1,842 shares advanced compared to 1,228 declining shares on the NSE.
With investors weighing the resilience of small caps against the valuation comfort offered by large caps, value investing within the Nifty 50 is gaining renewed attention. According to The Economic Times, the index's revised methodology seeks to identify relatively inexpensive companies among India's largest and most liquid businesses, using earnings, sales, book value and dividend yield as key valuation signals. The strategy allows investors to tilt towards cheaper parts of the Nifty 50 basket without stepping down the quality or liquidity ladder, as reported by Chintan Haria, Principal – Investment Strategy at ICICI Prudential AMC.
The NSE's June 2026 notification introduced significant changes to the Nifty 50 value methodology. As reported by The Economic Times, the revised methodology replaces the earlier weighting scheme of ROCE (40%), P/E (30%), P/B (20%) and dividend yield (10%) with equal 25% weights for Earnings/Price, Sales/Price, Book Value/Price and Dividend Yield. The revision also introduces tilt weighting, moving away from rigid free-float weighting alone, and raises the number of compulsory inclusions from five to ten. The methodology now uses semi-annual rebalancing in June and December, compared to the previous annual cycle.
According to Haria's analysis reported by The Economic Times, valuation-aware weighting tends to help when leadership is narrow and a few stocks have run far ahead of their fundamentals. However, the strategy creates genuine opportunity cost as value weighting systematically underweights companies that appear expensive on valuation grounds. The strategy is fundamentally a value index, not a value-plus-quality index, and does not eliminate value traps entirely. As reported, investors should view it as a pure valuation tilt with the trade-off that some exposure to fundamentally challenged but statistically cheap companies is possible.
As reported by The Economic Times, the strategy is better understood as a complement than a replacement for conventional large-cap allocation. With 20 stocks drawn from the Nifty 50 and a valuation tilt, it is more concentrated than the parent index and likely to deviate from it. The methodology suits investors with a five-year or longer horizon who understand how value tilt may perform in different market cycles, as factor cycles can persist and value can underperform for extended periods. With the index showing early signs of stabilisation near the psychological 24,000 zone and forming a Morning Star-like pattern, sustained follow-through above 24,300 is essential to confirm the reversal.
