NASDAQ 100 explained: What Indian investors need to know
The NASDAQ 100 index tracks 100 of the largest non-financial companies listed on the Nasdaq Stock Market. It serves as the world's premier benchmark for technology and innovation-driven growth. For Indian investors, it provides direct exposure to U.S. tech giants such as Apple, Microsoft, NVIDIA, and Amazon. These companies dominate global markets but remain unavailable on domestic exchanges.
Created on January 31, 1985, the NASDAQ 100 has evolved from a niche technology benchmark to a $32 trillion powerhouse. The index crossed the 20,000 milestone for the first time in December 2024. With a 40-year compound annual growth rate of 14.25% versus the S&P 500's 11.57%, it has consistently rewarded long-term investors.
What is the NASDAQ 100 index and how does it work?
The NASDAQ 100 (ticker: NDX) represents a fundamentally different investment proposition than the S&P 500 or Dow Jones. Its defining characteristic is the explicit exclusion of financial companies. Banks, insurance firms, and brokerages are barred by design. Nasdaq created a separate Nasdaq Financial-100 index specifically for that sector. This exclusion allows investors to gain pure exposure to technology, consumer, healthcare, and industrial innovators.
Unlike the Dow Jones Industrial Average, which uses price-weighting, the NASDAQ 100 employs modified market-capitalisation weighting. This methodology starts with standard market-cap weights but applies strict caps. No single company can exceed 24% of the index. Companies with weights above 4.5% collectively cannot exceed 48% of the total index weight. These constraints are in place to meet IRS Regulated Investment Company diversification requirements.
The index requires an exclusive listing on Nasdaq. Companies that dual-list on the NYSE are ineligible. It also requires a minimum average daily traded value of $5 million and a 10% free float. These requirements were updated in June 2024 when Nasdaq modernised its methodology. The changes shifted liquidity requirements from share-volume-based to dollar-value-based measurement.
Top NASDAQ 100 stocks and their weightings
The NASDAQ 100 companies list reveals extreme concentration in mega-cap tech. The top holdings significantly drive index performance.
| Rank | Company | Ticker | Weight |
|---|---|---|---|
| 1 | NVIDIA | NVDA | 13.39% |
| 2 | Apple | AAPL | 11.07% |
| 3 | Microsoft | MSFT | 10.02% |
| 4 | Amazon | AMZN | 7.44% |
| 5 | Alphabet (Class A) | GOOGL | 6.27% |
| 6 | Broadcom | AVGO | 4.72% |
| 7 | Meta Platforms | META | 4.69% |
| 8 | Tesla | TSLA | 4.31% |
The top 10 holdings account for approximately 52-53% of the entire index. The Magnificent Seven stocks—Apple, Microsoft, NVIDIA, Alphabet, Amazon, Meta, and Tesla—collectively represent roughly 63% of index weight. This means 93 other companies make up just 37% of performance.
NVIDIA's ascent has been particularly dramatic. The chipmaker went from being the smallest Magnificent Seven contributor at 0.8% in 2015 to the single most significant NASDAQ 100 component in 2025. Insatiable AI computing demand powered this transformation.
Sector weightings in the NASDAQ 100
The NASDAQ 100 allocates approximately 59-61% to the technology sector. This compares to roughly 32% for the S&P 500. This concentrated bet on innovation defines the index's character and drives its distinctive performance profile.
Technology dominates at 59-61%, followed by consumer discretionary at 18-21%. Healthcare and biotech account for 5-6%, while telecommunications accounts for 4-5%. Industrials hold 4-5%, consumer staples around 2.8-3%, and utilities less than 1%. Financial companies hold exactly 0% as they are excluded by design. This zero allocation to financials differentiates the NASDAQ 100 from virtually every other primary index.
The consumer discretionary allocation includes Amazon, Tesla, Costco, Booking Holdings, and Airbnb. Healthcare features AstraZeneca, Amgen, Intuitive Surgical, and Vertex Pharmaceuticals. Industrial names like Honeywell, PACCAR, and CSX provide modest non-tech exposure. The index also includes 10 foreign-incorporated companies, such as ASML from the Netherlands, AstraZeneca from the UK, and MercadoLibre from Uruguay.
NASDAQ 100 historical returns and performance
The NASDAQ 100 delivered exceptional returns during the recent bull market. It gained 53.81% in 2023—its best year since 1999. This was followed by 24.88% in 2024. The index crossed 20,000 for the first time in December 2024, finishing that year above 21,300. These gains were driven by the AI boom, which transformed companies like NVIDIA.
Long-term performance tells a compelling story. The 5-year compound annual growth rate stands at 22.7-23.9%. The 10-year CAGR reaches 18.1-19.7%. Since its inception in 1985, the index has delivered 14.25% annually, compared with the S&P 500's 11.57%. This 2.7 percentage point annual advantage compounds dramatically over decades.
Since December 2007, the NASDAQ 100 has returned 1,342% cumulatively, compared with 560% for the S&P 500. This delivered 2.4 times the total return over that period. The NASDAQ 100 outperformed the S&P 500 in 14 of the last 18 calendar years. That represents a 78% win rate with average annual outperformance of 4-5 percentage points.
However, concentration cuts both ways. During the 2022 bear market, the NASDAQ 100 fell 32.97% versus 18.25% for the broader index. The dot-com crash saw the index plunge 78% from its 2000 peak, taking years to recover. Higher returns come with higher volatility. Investors must prepare for sharper drawdowns during market corrections.
NASDAQ 100 vs NASDAQ Composite: key differences
The NASDAQ Composite and NASDAQ 100 are frequently confused. They represent fundamentally different investment exposures despite sharing the NASDAQ name.
The NASDAQ 100 contains exactly 100 companies, while the Composite holds over 3,000 stocks. Financial companies are excluded from the NASDAQ 100 but are included in the Composite at approximately a 3.6% weight. The NASDAQ 100 excludes real estate and REITs entirely. It contains no small-caps, while the Composite includes companies of all sizes. This makes the NASDAQ 100 a pure large-cap growth benchmark.
Weighting methods differ significantly between the two indices. The NASDAQ 100 uses modified market-cap weighting with strict concentration limits. The Composite uses pure market-cap weighting without caps. Reconstitution happens annually in December for the NASDAQ 100 but daily for the Composite. This means the Composite constantly adds and removes stocks based on listing status.
Despite having only 100 of the Composite's 3,000+ stocks, the NASDAQ 100 accounts for approximately 80% of the Composite's total weight. Both indices maintain roughly 90% daily return correlation. The Composite occasionally outperforms during small-cap rallies, but the NASDAQ 100's large-cap focus provides more stability during market stress.
How companies get included and excluded
Nasdaq applies rigorous eligibility criteria during annual reconstitution each December. Companies must meet several requirements to qualify for the NASDAQ 100. The bar is deliberately high to ensure that only established, liquid companies are included in the index.
The primary US listing must be exclusively on Nasdaq Global Select or Global Market. Dual-listing on the NYSE disqualifies companies immediately. Only non-financial companies qualify per the ICB classification. A minimum average daily traded value of $5 million over three months is required. At least 10% of shares must be publicly available as free float.
Companies must be listed for at least three full calendar months. This seasoning requirement prevents newly IPO'd companies from entering immediately. They cannot be in bankruptcy proceedings. Current financial reports are mandatory with no filing delinquencies. No pending acquisition agreements should exist that would result in delisting.
Selection follows a ranking system based on market capitalisation. The top 75 companies by market cap automatically qualify, regardless of current membership status. Existing members ranked 76-125 enjoy buffer zone protection. This prevents excessive turnover from minor fluctuations in market cap. Annual reconstitution occurs on the third Friday of December during quadruple witch options expiration.
The December 2024 reconstitution brought notable changes. Palantir Technologies, MicroStrategy, and Axon Enterprise joined the index. Super Micro Computer, Moderna, and Illumina were removed. Super Micro's removal was dramatic—added in July 2024 during its AI-fueled rally and ejected just five months later. The company lost 59% of its value amid allegations of accounting fraud and the resignation of its auditor.
Why the NASDAQ 100 is popular among Indian investors
The index's popularity among Indian investors stems from several factors. Technology exposure provides access to AI, cloud computing, semiconductors, and biotech. These sectors remain underrepresented on Indian exchanges. Companies like NVIDIA, Microsoft, and Amazon have no comparable Indian equivalents. Investing in the NASDAQ 100 effectively addresses this portfolio gap.
Dollar denomination offers natural currency hedging. The rupee has historically depreciated against the dollar, moving from ₹45/USD in 2010 to approximately ₹86/USD in early 2026. This amplifies returns when converted back to rupees. A 10% dollar return becomes larger in rupee terms when the currency depreciates. Diversification benefits include low correlation to Indian market cycles.
Indian investors can access the NASDAQ 100 through multiple routes.
Our complete guide to investing in US stocks from India outlines the step-by-step process.
Domestic mutual funds, such as Motilal Oswal Nasdaq 100 Fund of Funds, offer simple, rupee-denominated access. ICICI Prudential NASDAQ 100 Index Fund provides direct replication with 0.50% expense ratio. The Invesco QQQ ETF is available through LRS for direct investment with just 0.20% expense ratio.
However, SEBI's $7 billion industry-wide cap on overseas mutual fund investments creates periodic availability challenges. The $1 billion per-AMC limit adds another constraint. Many NASDAQ 100 funds halted fresh investments from April 2024. They open intermittently when redemptions create headroom. Always verify current availability before investing. The LRS route with a $250,000 annual limit offers an alternative for larger allocations.
Learn more about the LRS scheme and foreign investments to understand the regulatory framework.
How the NASDAQ 100 index is calculated
The NASDAQ 100 uses modified market-capitalisation weighting. This methodology differs from pure market-cap weighting used by most indices. It applies specific caps to prevent excessive concentration in any single stock. The approach balances exposure to large-cap leaders while maintaining diversification.
No single company can exceed 24% of the total index weight. All companies with weights above 4.5% cannot collectively exceed 48%. These constraints are in place to meet IRS Regulated Investment Company diversification requirements. The QQQ ETF requires this structure to operate tax-efficiently. Without these caps, NVIDIA or Apple could dominate the entire index.
Quarterly rebalancing occurs on the third Friday of March, June, September, and December. Special rebalancing can happen if concentration limits are breached between quarters. The July 2023 special rebalance redistributed $53 billion to address the Magnificent Seven overweighting. This was only the third special rebalance in the index's history. The divisor methodology ensures index continuity across all adjustments.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
Ready to earn on every trade?
Invest in 11,000+ US stocks & ETFs
Table of Contents
The NASDAQ 100 index tracks 100 of the largest non-financial companies listed on the Nasdaq Stock Market. It serves as the world's premier benchmark for technology and innovation-driven growth. For Indian investors, it provides direct exposure to U.S. tech giants such as Apple, Microsoft, NVIDIA, and Amazon. These companies dominate global markets but remain unavailable on domestic exchanges.
Created on January 31, 1985, the NASDAQ 100 has evolved from a niche technology benchmark to a $32 trillion powerhouse. The index crossed the 20,000 milestone for the first time in December 2024. With a 40-year compound annual growth rate of 14.25% versus the S&P 500's 11.57%, it has consistently rewarded long-term investors.
What is the NASDAQ 100 index and how does it work?
The NASDAQ 100 (ticker: NDX) represents a fundamentally different investment proposition than the S&P 500 or Dow Jones. Its defining characteristic is the explicit exclusion of financial companies. Banks, insurance firms, and brokerages are barred by design. Nasdaq created a separate Nasdaq Financial-100 index specifically for that sector. This exclusion allows investors to gain pure exposure to technology, consumer, healthcare, and industrial innovators.
Unlike the Dow Jones Industrial Average, which uses price-weighting, the NASDAQ 100 employs modified market-capitalisation weighting. This methodology starts with standard market-cap weights but applies strict caps. No single company can exceed 24% of the index. Companies with weights above 4.5% collectively cannot exceed 48% of the total index weight. These constraints are in place to meet IRS Regulated Investment Company diversification requirements.
The index requires an exclusive listing on Nasdaq. Companies that dual-list on the NYSE are ineligible. It also requires a minimum average daily traded value of $5 million and a 10% free float. These requirements were updated in June 2024 when Nasdaq modernised its methodology. The changes shifted liquidity requirements from share-volume-based to dollar-value-based measurement.
Top NASDAQ 100 stocks and their weightings
The NASDAQ 100 companies list reveals extreme concentration in mega-cap tech. The top holdings significantly drive index performance.
| Rank | Company | Ticker | Weight |
|---|---|---|---|
| 1 | NVIDIA | NVDA | 13.39% |
| 2 | Apple | AAPL | 11.07% |
| 3 | Microsoft | MSFT | 10.02% |
| 4 | Amazon | AMZN | 7.44% |
| 5 | Alphabet (Class A) | GOOGL | 6.27% |
| 6 | Broadcom | AVGO | 4.72% |
| 7 | Meta Platforms | META | 4.69% |
| 8 | Tesla | TSLA | 4.31% |
The top 10 holdings account for approximately 52-53% of the entire index. The Magnificent Seven stocks—Apple, Microsoft, NVIDIA, Alphabet, Amazon, Meta, and Tesla—collectively represent roughly 63% of index weight. This means 93 other companies make up just 37% of performance.
NVIDIA's ascent has been particularly dramatic. The chipmaker went from being the smallest Magnificent Seven contributor at 0.8% in 2015 to the single most significant NASDAQ 100 component in 2025. Insatiable AI computing demand powered this transformation.
Sector weightings in the NASDAQ 100
The NASDAQ 100 allocates approximately 59-61% to the technology sector. This compares to roughly 32% for the S&P 500. This concentrated bet on innovation defines the index's character and drives its distinctive performance profile.
Technology dominates at 59-61%, followed by consumer discretionary at 18-21%. Healthcare and biotech account for 5-6%, while telecommunications accounts for 4-5%. Industrials hold 4-5%, consumer staples around 2.8-3%, and utilities less than 1%. Financial companies hold exactly 0% as they are excluded by design. This zero allocation to financials differentiates the NASDAQ 100 from virtually every other primary index.
The consumer discretionary allocation includes Amazon, Tesla, Costco, Booking Holdings, and Airbnb. Healthcare features AstraZeneca, Amgen, Intuitive Surgical, and Vertex Pharmaceuticals. Industrial names like Honeywell, PACCAR, and CSX provide modest non-tech exposure. The index also includes 10 foreign-incorporated companies, such as ASML from the Netherlands, AstraZeneca from the UK, and MercadoLibre from Uruguay.
NASDAQ 100 historical returns and performance
The NASDAQ 100 delivered exceptional returns during the recent bull market. It gained 53.81% in 2023—its best year since 1999. This was followed by 24.88% in 2024. The index crossed 20,000 for the first time in December 2024, finishing that year above 21,300. These gains were driven by the AI boom, which transformed companies like NVIDIA.
Long-term performance tells a compelling story. The 5-year compound annual growth rate stands at 22.7-23.9%. The 10-year CAGR reaches 18.1-19.7%. Since its inception in 1985, the index has delivered 14.25% annually, compared with the S&P 500's 11.57%. This 2.7 percentage point annual advantage compounds dramatically over decades.
Since December 2007, the NASDAQ 100 has returned 1,342% cumulatively, compared with 560% for the S&P 500. This delivered 2.4 times the total return over that period. The NASDAQ 100 outperformed the S&P 500 in 14 of the last 18 calendar years. That represents a 78% win rate with average annual outperformance of 4-5 percentage points.
However, concentration cuts both ways. During the 2022 bear market, the NASDAQ 100 fell 32.97% versus 18.25% for the broader index. The dot-com crash saw the index plunge 78% from its 2000 peak, taking years to recover. Higher returns come with higher volatility. Investors must prepare for sharper drawdowns during market corrections.
NASDAQ 100 vs NASDAQ Composite: key differences
The NASDAQ Composite and NASDAQ 100 are frequently confused. They represent fundamentally different investment exposures despite sharing the NASDAQ name.
The NASDAQ 100 contains exactly 100 companies, while the Composite holds over 3,000 stocks. Financial companies are excluded from the NASDAQ 100 but are included in the Composite at approximately a 3.6% weight. The NASDAQ 100 excludes real estate and REITs entirely. It contains no small-caps, while the Composite includes companies of all sizes. This makes the NASDAQ 100 a pure large-cap growth benchmark.
Weighting methods differ significantly between the two indices. The NASDAQ 100 uses modified market-cap weighting with strict concentration limits. The Composite uses pure market-cap weighting without caps. Reconstitution happens annually in December for the NASDAQ 100 but daily for the Composite. This means the Composite constantly adds and removes stocks based on listing status.
Despite having only 100 of the Composite's 3,000+ stocks, the NASDAQ 100 accounts for approximately 80% of the Composite's total weight. Both indices maintain roughly 90% daily return correlation. The Composite occasionally outperforms during small-cap rallies, but the NASDAQ 100's large-cap focus provides more stability during market stress.
How companies get included and excluded
Nasdaq applies rigorous eligibility criteria during annual reconstitution each December. Companies must meet several requirements to qualify for the NASDAQ 100. The bar is deliberately high to ensure that only established, liquid companies are included in the index.
The primary US listing must be exclusively on Nasdaq Global Select or Global Market. Dual-listing on the NYSE disqualifies companies immediately. Only non-financial companies qualify per the ICB classification. A minimum average daily traded value of $5 million over three months is required. At least 10% of shares must be publicly available as free float.
Companies must be listed for at least three full calendar months. This seasoning requirement prevents newly IPO'd companies from entering immediately. They cannot be in bankruptcy proceedings. Current financial reports are mandatory with no filing delinquencies. No pending acquisition agreements should exist that would result in delisting.
Selection follows a ranking system based on market capitalisation. The top 75 companies by market cap automatically qualify, regardless of current membership status. Existing members ranked 76-125 enjoy buffer zone protection. This prevents excessive turnover from minor fluctuations in market cap. Annual reconstitution occurs on the third Friday of December during quadruple witch options expiration.
The December 2024 reconstitution brought notable changes. Palantir Technologies, MicroStrategy, and Axon Enterprise joined the index. Super Micro Computer, Moderna, and Illumina were removed. Super Micro's removal was dramatic—added in July 2024 during its AI-fueled rally and ejected just five months later. The company lost 59% of its value amid allegations of accounting fraud and the resignation of its auditor.
Why the NASDAQ 100 is popular among Indian investors
The index's popularity among Indian investors stems from several factors. Technology exposure provides access to AI, cloud computing, semiconductors, and biotech. These sectors remain underrepresented on Indian exchanges. Companies like NVIDIA, Microsoft, and Amazon have no comparable Indian equivalents. Investing in the NASDAQ 100 effectively addresses this portfolio gap.
Dollar denomination offers natural currency hedging. The rupee has historically depreciated against the dollar, moving from ₹45/USD in 2010 to approximately ₹86/USD in early 2026. This amplifies returns when converted back to rupees. A 10% dollar return becomes larger in rupee terms when the currency depreciates. Diversification benefits include low correlation to Indian market cycles.
Indian investors can access the NASDAQ 100 through multiple routes.
Our complete guide to investing in US stocks from India outlines the step-by-step process.
Domestic mutual funds, such as Motilal Oswal Nasdaq 100 Fund of Funds, offer simple, rupee-denominated access. ICICI Prudential NASDAQ 100 Index Fund provides direct replication with 0.50% expense ratio. The Invesco QQQ ETF is available through LRS for direct investment with just 0.20% expense ratio.
However, SEBI's $7 billion industry-wide cap on overseas mutual fund investments creates periodic availability challenges. The $1 billion per-AMC limit adds another constraint. Many NASDAQ 100 funds halted fresh investments from April 2024. They open intermittently when redemptions create headroom. Always verify current availability before investing. The LRS route with a $250,000 annual limit offers an alternative for larger allocations.
Learn more about the LRS scheme and foreign investments to understand the regulatory framework.
How the NASDAQ 100 index is calculated
The NASDAQ 100 uses modified market-capitalisation weighting. This methodology differs from pure market-cap weighting used by most indices. It applies specific caps to prevent excessive concentration in any single stock. The approach balances exposure to large-cap leaders while maintaining diversification.
No single company can exceed 24% of the total index weight. All companies with weights above 4.5% cannot collectively exceed 48%. These constraints are in place to meet IRS Regulated Investment Company diversification requirements. The QQQ ETF requires this structure to operate tax-efficiently. Without these caps, NVIDIA or Apple could dominate the entire index.
Quarterly rebalancing occurs on the third Friday of March, June, September, and December. Special rebalancing can happen if concentration limits are breached between quarters. The July 2023 special rebalance redistributed $53 billion to address the Magnificent Seven overweighting. This was only the third special rebalance in the index's history. The divisor methodology ensures index continuity across all adjustments.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
Ready to earn on every trade?
Invest in 11,000+ US stocks & ETFs
