THE 5-YEAR-OLD VERSION
A stock is one apple. An index is a list of the 50 biggest apples in the orchard, with a scoreboard that shows how they are doing together. You cannot buy the scoreboard. A fund is a basket that someone fills with apples for you. An index fund is a basket that copies the list exactly.
The four things, side by side
| Thing | What it is | Can you buy it? |
|---|---|---|
| Stock | One company, for example Infosys | Yes, through a broker |
| Index | A list and a scoreboard, for example Nifty 50 (50 large companies picked by NSE Indices) | No, it is only a measure |
| Mutual fund | A pool of many investors' money, run by a fund house (AMC), holding many stocks | Yes, from the AMC or an app |
| ETF | A fund that trades on the exchange like a share, often copying an index | Yes, through a broker at a live price |
An index fund is a mutual fund that simply copies an index, so it holds the same companies in the same proportions. An active fund has a manager who picks stocks, trying to beat the index, and charges more for it.
What is inside the Nifty 50?
The Nifty 50 is weighted by company size (free-float market capitalisation), so bigger companies count for more. These ten make up the largest part:
Weights as published by NSE Indices on 30 Sep 2026 (read 17 Oct 2026). The ten together are 52.3% of the index.
So an index fund on the Nifty 50 puts about 52 paise of every rupee into just ten companies, with banks well represented. "50 companies" does not mean 50 equal bets.
Why this matters when you own more than one fund
If you own a Nifty 50 index fund, a large-cap fund and a flexi-cap fund, you probably own HDFC Bank and Reliance three times. That is called overlap. Our free overlap analyzer shows it for Indian funds, ETFs and international funds, and the Portfolio X-Ray adds everything up across your whole portfolio.