Nifty means National Fifty. This is an index of the National Stock Exchange, which includes the top 50 companies according to market capitalisation. It was started in 1994. This index is an average of the share price of those 50 top companies. If these 50 companies perform well then NIFTY will go up and if they perform poorly then it will go down.
If any company does not perform well out of these 50 companies, then it will automatically be out of NIFTY and will be replaced by a good performing company. Meaning NIFTY will always be only 50 companies but it keeps on coming due to performance.
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