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I have been reading 'The simple path to wealth' by Jim Collins which advances the indexing philosophy to investment.

The issue is that the book is written from the perspective of a US citizen, and hence recommends a broad stock market fund offered by Vanguard that exposes investors to the US stock market.

I am an Indian citizen, and would like to be exposed to the Indian stock market. My elementary searches reveal a lack of analogous funds in India. This begs the original question: Is there a total stock market index fund in India, like the one offered by Vanguard in the US?

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    It's not dependent on citizenship though. You would want to pick the market which best meets your risks and gains target, not necessarily one of the country you are a citizen of. Better yet, multiple markets to diversify.
    – void_ptr
    Jun 16, 2019 at 12:59
  • Fair point. The thing is, I am just starting out with my investments (I am a 20 year old). And even though I have had an education in commerce - for the time being - international markets seem outside my circle of competence. So the plan is to start with the familiar (ie, home country) and venture out with experience.
    – Dhruv Gupta
    Jun 17, 2019 at 5:03
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    @void_ptr But effective risks and gains do depend on citizenship, to the extent that one's future expenses are in a specific currency, and investing in foreign markets creates an additional currency risk in funding those expenses (while currency hedging has its own costs). Granted, the benefits of global diversification are real and investors often exhibit "home country bias" beyond what is justified.
    – nanoman
    Jun 17, 2019 at 7:00
  • Excellent point. The fact that currency fluctuation risk didn't strike me immediately tells me I have a lot to learn! Thank you for the comment.
    – Dhruv Gupta
    Jun 17, 2019 at 7:41
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    Most countries have their own ETF (Exchange-traded funds) set up by various brokers. Nevertheless, you must be careful since not all ETFs are the same. Some ETF may actively trade and waste the fund money. So read the perspective before jump into the bandwagon. en.wikipedia.org/wiki/Exchange-traded_fund
    – mootmoot
    Jun 17, 2019 at 12:38

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There are two primary indices in India, the NIFTY 50 and SENSEX (30).

There are many funds that invest in either of these indexes. While these may not be representative of the entire stock market, they would represent a significant percentage. Most total stock market funds are capitalization weighted, so proportionately invest more in the larger market cap companies.

The problem with investing in broader less popular indices is that they may be less liquid and their constituents may be less liquid, resulting in higher transaction costs that will reduce gains.

An important factor also when choosing funds is the expense ratio. Higher expense ratios can make a significant difference over years of holding the positions.

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    As you mentioned, NIFTY and SENSEX are not total stock market indices. In NIFTY, the top 10 companies get slightly more than 60% of the weight; this is opposed to VTSAX (a total stock market fund offered by Vanguard) where the top 10 companies only get about 18% of the share. That's a significant difference, one that prevents me from accepting your answer. The points about liquidity and expense ratio are amazing. Thanks for taking out the time to write the answer!
    – Dhruv Gupta
    Jun 17, 2019 at 5:31
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An equivalent of 'Total Stock Market' index in India would be 'Nifty 500'. It represents 97% of all stocks listed on NSE.

Unlike S&P 500, which is solely composed of large-cap stocks, due to India's relatively smaller market size, Nifty 500 includes companies of all sizes - large-cap (76%), mid-cap (18%) and small-cap (6%). The only thing you miss is the micro-cap stocks. Thus practically, it serves the same purpose as Vanguard's US fund in the Indian market and covers 97% of stocks listed on NSE.

As of now, Motilal Oswal offers a Nifty 500 ETF

But if you're very particular about "total" and want to include even the micro-cap stocks, Navi Asset Management has filed an application with SEBI for a Total Stock Market ETF and it might get approved soon. Will it make any difference? No, because 'Nifty 500' and 'Nifty Total Stock Market' have a correlation of .98, but the decision is ultimately yours.

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I'm a fan of Jhon Bogle and his follower JL Collins and their investment philosophy and most importantly, investor of VTSAX fund. To answer your question, I feel Nifty 500 Index Fund comes very close to VTSAX. It's offered by Motilal Oswal.

Also, let me know if you found anything better than this.

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  • No, I haven't found anything.
    – Dhruv Gupta
    Mar 10, 2020 at 14:24
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Not a complete market index but you can checkout NIFTYBEES & JUNIORBEES. Both are Exchange Traded Funds. The Niftybees tracks the NIFTY index i.e. the top 50 companies & the Juniorbees tracks the next 50. So with a combination of these two, you can invest in top 100 companies on NIFTY.

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  • Out of curiosity, how many companies are traded on the Indian stock exchanges. Just 100 companies does not seem like it would capture mid-cap and small-cap stocks.
    – RonJohn
    Jan 30, 2021 at 8:37
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    The two major exchanges in India are the National Stock Exchange (NSE) with ~2k listed companies & the Bombay Stock Exchange (BSE) with ~5k listed companies. However, a huge number of listed companies are not actively traded. A piece of old information from NSE official website- "The total traded value for the last six months ending March 2019 of all index constituents(top 100 companies) is approximately 66.2% of the traded value of all stocks on the NSE." I do agree that 100 companies are definitely not a true representation of the entire market but it's still a good index to track.
    – Ujwal Ratra
    Jan 31, 2021 at 16:54
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Combination of nifty 50 & nifty next 50 will do the job for you.

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