NIFTY50 USD
Also written NIFTY 50 USD
The dollar-linked variant of NIFTY 50: the NIFTY 50 close multiplied by the base-date exchange rate and divided by the day's exchange rate, so foreign investors see Indian equity returns in dollars.
In plain language
A foreign investor who buys Indian shares earns two returns at once: the return on the shares in rupees, and the gain or loss on the rupee against their home currency. NIFTY 50 shows only the first.
NIFTY50 USD shows both. The workbook calls it a dollar-linked variant of NIFTY 50, constructed as an instrument for measuring returns on equity investment in US dollar terms — "NIFTY 50, measured in dollars".
It is the workbook's example of a dollar denominated index: foreign investors with equity exposure in India want to measure their returns in dollars, so dollar-denominated indices are created for them. The workbook adds that NIFTY 50 is also computed in Australian dollars (AUD) and Canadian dollars (CAD).
How it works
The calculation:
NIFTY50 USD = Closing NIFTY 50 × Exchange rate on base date ÷ Exchange rate for the day
Exchange rates here are rupees per US dollar.
Base. The base date of NIFTY50 USD is the same as NIFTY 50 — November 3, 1995 — and the base index value is 1,000 points.
What the formula does. Dividing by today's rate and multiplying by the base-date rate restates the rupee index at base-date currency terms:
- If the rupee weakens (more rupees per dollar), the denominator rises and NIFTY50 USD falls relative to NIFTY 50.
- If the rupee strengthens, NIFTY50 USD rises relative to NIFTY 50.
This is the exchange rate risk of Chapter 1 made visible: changes in exchange rates affect an investor's return when converting the investment back into the home currency.
The formula
NIFTY50 USD = NIFTY 50 close × (Rs/USD on base date) ÷ (Rs/USD today)
Approx. USD return ≈ (1 + INR index return) × (Rate at start ÷ Rate at end) − 1
A worked example
The index levels and exchange rates are illustrative, including the base-date rate, which is assumed to be Rs 35.00 per dollar for round numbers.
Year start. NIFTY 50 closes at 24,000; the rupee is at Rs 84 per dollar.
NIFTY50 USD = 24,000 × 35 ÷ 84 = 10,000
Year end. NIFTY 50 has risen 10% to 26,400; the rupee has weakened to Rs 88.
NIFTY50 USD = 26,400 × 35 ÷ 88 = 10,500
| Start | End | Return | |
|---|---|---|---|
| NIFTY 50 | 24,000 | 26,400 | +10.0% |
| NIFTY50 USD | 10,000 | 10,500 | +5.0% |
A US pension fund that put the equivalent of Rs 84 crore (USD 10 million) into an index-tracking Indian portfolio ends with Rs 92.4 crore. Converted at Rs 88, that is USD 10.5 million — a 5% dollar return, exactly what NIFTY50 USD shows. Half of the rupee gain disappeared in the currency move, which is why a foreign investor should benchmark against NIFTY50 USD rather than NIFTY 50.
Why NISM asks about it
Chapter 8, section 8.5.7 (Dollar denominated index), defines NIFTY50 USD, gives the formula and, in a footnote, the base date and base value; it also notes AUD and CAD versions. Chapter 1's exchange rate risk explains why it exists. Expect the formula, the base date and value, and a direction question — what happens to NIFTY50 USD when the rupee depreciates.
Common exam traps
- Formula direction: NIFTY 50 × base-date rate ÷ today's rate. Reversing the rates reverses the currency effect.
- Rupee depreciation lowers NIFTY50 USD relative to NIFTY 50; appreciation raises it.
- Base date November 3, 1995; base value 1,000 — the same base date as NIFTY 50.
- It is the same 50 stocks. Only the currency of measurement changes.
- NIFTY 50 is also computed in AUD and CAD — do not answer that USD is the only foreign-currency version.
Where this is taught
- Series XXI-B · Chapter 12: Introduction to Indicesintroduced here
- Series XIX-E · Chapter 8: Indices and Benchmarkingintroduced here
Related terms
- BenchmarkThe independently published index a scheme's performance is measured against, chosen to match its investment objective, asset allocation and strategy, and disclosed in the Scheme Information Document.
- Total Return IndexThe variant of a market index that adds the dividends and interest paid by its constituents to their price movement — the only variant a mutual fund scheme may be benchmarked against since 1 February 2018.
- IndexA statistical indicator that tracks a portfolio of securities representing a market or part of it, expressed as a change from a base value — so the percentage move matters, not the number itself.
- Exchange Rate RiskThe risk that an investment’s value, measured in the home currency, changes because foreign exchange rates move. A falling rupee raises returns on foreign assets; a rising rupee cuts them.
- MSCI India IndexMSCI's index of the large and mid-cap segments of Indian equity — 86 constituents covering about 85% of market capitalisation per the workbook — built for consistent cross-country comparison.