What is Nifty BeES?

Nifty BeES is an open-ended Benchmark Exchange-Traded Scheme, which is India's first Exchange-Traded Fund. It seeks to track the performance of the Nifty 50 Index. Nifty BeES is a smart way to invest in the top 50 companies listed on the National Stock Exchange without buying each stock individually. Each unit of Nifty BeES represents a tiny share of all 50 companies from different sectors like banking, IT, FMCG, energy, and many more; hence, making it really easy for anyone to start investing with even just 1 unit. 

Like any other stock, Nifty BeES trades on both the exchanges, NSE and BSE. The price of the same keeps fluctuating during the day, depending on its demand and supply. The authorised participants and arbitrageurs help its market price remain near its actual NAV so that the ETF closely tracks the Nifty 50 Index. This makes Nifty BeES a simple, low-cost way to diversify investment across India’s leading companies. This article explains what is Nifty BeES, its features, how it works, and more. 

Features of Nifty BeES

Following are some of the features of Nifty BeEs: 

• Nifty 50 BeES is India’s very first ETF, launched on December 28, 2001. Currently, it is managed by Nippon India Mutual Fund. 
• Every unit of Nifty 50 BeES represents 1/100th of the Nifty 50 Index and 1/10th of the S&P CNX Nifty Index, giving small, easy access to the whole index. 
• Investors can buy and sell this ETF at any time during the market hours, just like any regular stock, on the National Stock Exchange in dematerialised form. 
• The real-time NAV of Nifty BeES is calculated with the help of continuous trading on NSE, which helps the price remain near to the index value. 
• The units of Nifty BeES are tradable instantly, hence investors can buy and sell whenever needed quickly. 

How does Nifty BeES Work?

• Nifty BeES belongs to a class of Exchange-Traded Funds that tracks the Nifty 50 Index. 
• It invests in the same companies that form the Nifty 50. 
• It holds these constituent stocks in the same proportion as that of the index. 
• This helps the ETF give returns very close to the Nifty 50's actual performance. 
• It follows a passive investment approach that aims to mirror the performance of the market rather than outperform it. 
• Only a small amount of the fund is kept in liquid condition to ensure smooth buying and selling. 
• This simple setup makes it easy to understand what is meant by Nifty BeES. 

How is Nifty BeES Different from Nifty 50?

Here is the difference between Nifty BeEs and Nifty 50:  

 How to Invest in Nifty BeES

After understanding what is Nifty BeES ETF, let’s look into how investors can invest in Nifty BeEs: 

Step 1: Open Trading and Demat Accounts 
Open a trading account and a Demat account from a broker or bank. These let investors buy ETFs and hold them in electronic form. 

Step 2: Add and Verify Bank Details 
Link the bank account to the trading account and complete any verification steps. 

Step 3: Fund Trading Account 
Transfer money from the bank to the trading account before placing an order. 

Step 4: Find Nifty 50 BeES on the Trading Platform 
Search for “Nifty 50 BeES” or its ticker symbol on the NSE/BSE in the platform search box. 

Step 5: Place a Buy Order 
Choose required units and place a market order (buy at current price) or a limit order (buy only at a set price). 

Step 6: Check the Order and Confirm 
Make sure the order details are correct, then confirm the purchase. The order will execute during market hours. 

Step 7: View Units in the Demat Account 
After the order is executed, the Nifty 50 BeES units will show up in Demat holdings. 

Step 8 Monitor and Sell When Needed 
Watch the price and sell any time during market hours by placing a sell order, just like selling a stock. 

Advantages and Disadvantages of Nifty BeES  

Nifty BeES allows tracking the Nifty 50 Index. It may be cost-efficient but comes with certain limitations linked to market movement and transaction costs. Here is the difference between advantages and disadvantages of Nifty BeES: 

 Taxation of Nifty BeES

Investors should consider taxation before buying or selling Nifty BeES, as it affects overall returns. 

• Short-Term Capital Gains (STCG):
  When an investor sells Nifty BeES units within one year, the profit is taxed at 15%. This rate applies to equity-oriented ETFs under current tax rules, not 20%. 
• Long-Term Capital Gains (LTCG):
  If the units are held for more than one year, any profit exceeding ₹1 lakh is taxed at 10% without the benefit of indexation. 
• Equity-oriented classification:
  Nifty BeES is treated like an equity fund, so it follows the same tax rules as equity mutual funds.

Conclusion 

Nifty 50 BeES offers easy trading, affordability, and benefits such as quick transactions and high liquidity, making it a convenient way to begin investing in the stock market. It gives investors broad exposure to India’s top companies, which helps reduce risk through diversification. However, because it is widely spread across many sectors, the returns may not always be very high. For beginner or cautious investors, it can be a practical and steady investment option. Investors can track the performance of their investment using a reliable stock market trading app.