An Index Fund is a type of mutual fund that doesn't try to pick winning stocks or beat the market. Instead, it simply buys every stock in a chosen market index, such as the Nifty 50 or Sensex, in the exact same proportion as the index itself. Its goal is purely to mirror, or track, the index's performance as closely as possible — nothing more, nothing less.
Because there's no active decision-making involved in choosing which stocks to buy, index funds have very low expense ratios compared to actively managed funds, since there's no expensive research team trying to outperform the market. Over the long run, a large number of actively managed funds actually fail to beat their benchmark index after fees, which is why index funds have become a popular, low-cost, ‘set it and forget it’ core holding for many investors.