Best Index Funds to Invest in India in October 2026

What are index funds?

An index fund is a mutual fund that does not try to beat the market. It holds the shares in a market index, such as the Nifty 50 or the Sensex, in the same proportions as the index, so its return follows the index's. SEBI requires an index fund to keep at least 95% of its assets in the securities of the index it tracks.

Because no manager is choosing stocks, an index fund is usually cheap to run. What you get is the index's return, minus the fund's costs, with a small difference called tracking error, because a fund cannot copy its index perfectly.

Top index funds to invest in India in October 2026

These 10 funds are the equity index funds, direct plans, with the lowest expense ratio among those that have at least three years of history and at least ₹500 crore in assets. They are listed from the lowest cost up, with the index each one tracks under its name. A lower expense ratio means more of the index's return stays with you, but compare funds that track the same index, because different indices behave differently. Tap a fund to see it in the app.

#	Fund	1Y return	3Y return	Expense ratio	Fund size
1	Navi Nifty 50 Index FundNIFTY 50	−7.17%	5.88%	0.06%	₹3,900 Cr
2	Nippon India Index FundNIFTY 50	−7.18%	5.87%	0.06%	₹3,461 Cr
3	Kotak Nifty 50 Index FundNIFTY 50	−7.17%	5.78%	0.06%	₹1,112 Cr
4	Bandhan Nifty 50 Index FundNIFTY 50	−7.23%	5.84%	0.08%	₹2,671 Cr
5	Kotak Nifty Next 50 Index FundNIFTY NEXT 50	3.49%	16.33%	0.08%	₹1,289 Cr
6	Axis Nifty 50 Index FundNIFTY 50	−7.20%	5.86%	0.09%	₹993 Cr
7	Axis Nifty Next 50 Index FundNIFTY NEXT 50	3.53%	16.26%	0.12%	₹532 Cr
8	Motilal Oswal Nifty 50 Index FundNIFTY 50	−7.19%	5.88%	0.13%	₹845 Cr
9	Aditya Birla Sun Life Nifty 50 Index FundNIFTY 50	−7.24%	5.82%	0.15%	₹1,417 Cr
10	Navi Nifty Next 50 Index FundNIFTY NEXT 50	3.42%	16.21%	0.15%	₹1,275 Cr

Index funds returns calculator

See what an investment in one of these funds would have grown to. Choose a fund, a monthly SIP or a one-time lumpsum, an amount and a period.

Details of the funds on this list

Let's take a closer look at these funds.

How do index funds work?

A mutual fund pools money from many investors. An index fund uses it to buy the shares in its index in the index's proportions, and changes its holdings only when the index changes.

You buy units of the fund at its net asset value (NAV), the price of one unit, which is worked out at the end of each trading day. When the shares in the portfolio rise, the NAV rises, and when they fall, the NAV falls.

The fund's return will differ slightly from its index's. The gap comes mainly from the fund's costs, from cash it holds, and from the time it takes to adjust when the index changes. A lower cost and a smaller gap both mean the fund follows its index more closely.

Every fund has an expense ratio, a yearly fee charged as a percentage of its assets. A direct plan has a lower expense ratio than the regular plan of the same fund, because it does not pay a distributor. Many funds also charge an exit load if you sell within a set period, often a year, so check the scheme document before you invest.

Who should invest in index funds?

Whether an index fund fits you depends on how its benefits and its risks sit with your goals, your time horizon and your comfort with falls.

Benefits of index funds

• Low cost. An index fund's expense ratio is usually much lower than that of an actively managed fund.
• Simple and transparent. The fund holds its index, so you can see what you own.
• Broad diversification in one fund, across the companies in the index.
• No reliance on a manager's stock choices, and you can start with a small amount through a SIP or a lumpsum.

Risks of index funds

• An index fund falls when its index falls. There is no manager to hold back or move into safer assets.
• It cannot beat its index, and it can trail it slightly because of costs and tracking differences.
• Indices differ. A fund that tracks a mid cap or small cap index can be much more volatile than one that tracks the Nifty 50.
• Returns are not guaranteed, and an index that did well in the past may not do so again.

In short, an index fund gives you the market's return at a low cost, and the market's risk. That suits investors who want a simple, low-cost holding and accept the ups and downs of the index they choose.

Who index funds may suit

• Investors with a time horizon of five years or more, because the time gives the market a chance to recover from falls.
• Investors who prefer a low-cost, rules-based fund to relying on a manager's choices.
• Investors who want a simple core holding to build a portfolio around.

Who should be careful

• Investors who need the money within a few years, because a fall close to the time they need it may not have time to recover.
• Investors who hope to beat the market. An index fund aims only to match it.
• Investors who would be uncomfortable seeing their investment fall with the market.

Taxation on index funds

This page covers index funds that track equity indices. They are equity-oriented funds, because they keep at least 95% of their assets in the shares of their index, so your gains are taxed as capital gains, depending on how long you hold the units.

• Short-term capital gains (STCG): if you sell within 12 months, the gain is taxed at 20%.
• Long-term capital gains (LTCG): if you sell after more than 12 months, gains up to ₹1.25 lakh in a financial year are tax-free. Gains above that are taxed at 12.5%.

The ₹1.25 lakh limit applies to all your equity fund and share sales in the year together, not to each fund. Each SIP instalment has its own purchase date, so when you sell, the older instalments are treated as sold first.

Tax rules can change, so check the current rules or ask a tax adviser before you sell.

Index funds that track bond indices are taxed under different rules.