What is Bank Nifty? Nifty Bank Stocks Index Highlights

What Are Bank Nifty Index Constituents? Nifty Bank Overview

The 12 most liquid and well-capitalized stocks from the banking sector that are traded on the National Stock Exchange make up Bank Nifty (NSE). It provides a benchmark that reflects the capital market performance of the Indian banking sector to investors and market intermediaries.

A company whose shares are included in the index and utilized to determine the index value is referred to as a constituent. Based on market capitalization, each index component's weight in the overall index is determined. The percentage of each item in the index is represented by the index weight. Contribution change quantifies how much each constituent contributed to changes in the index value.

NIFTY BANK STOCKS

HDFC Bank Ltd ICICI Bank Ltd Kotak Mahindra Bank Ltd Axis Bank Ltd State Bank of India IndusInd Bank Ltd AU Small Finance Bank Ltd Bank of Baroda Ltd Bandhan Bank Ltd Federal Bank Ltd IDFC First Bank Ltd Punjab National Bank

The Nifty Bank Index is calculated using the free float market capitalization approach, meaning that a stock's weight in the index increases as its free float (non-promoter) increases. The Bank index is typically used as a benchmark to evaluate the stock market performance of the banking sector. Additionally, it acts as the foundation for bank-related index funds, exchange-traded funds, and other structured products.

Some of the Nifty Bank index 's highlights

HDFC Bank (30.11%), ICICI Bank (28.51%), SBI (9.60%), Kotak Bank (12.43%), and Axis Bank (10.65%) are the five banks with the biggest weights in the Nifty Bank index.

? The Nifty Bank has produced total returns of 19.75% CAGR and price returns of 18.11% since its debut in September 2003.

? Since its debut, the NiftyBank Index's standard deviation (a measure of volatility) has been 29.89, while its beta has been 1.09, almost mirroring Nifty.

? The Bank Nifty has been a 41-bagger since its base value of 1000 on January 1, 2000.

? The NiftyBank Index is one of the most liquid and actively traded indices in the futures and options market on the exchange, along with the Nifty 50 index.

? As of September 30th, 2021, the P/E ratio for the Bank Nifty Index is 24.32X, the Price to Book is 2.81X, and the dividend yield is 0.33X.

How is Bank Nifty Index Calculated?

The requirements for companies to be included in the Bank Nifty are listed below.

? At the time of evaluation, the aforementioned company must be listed on the NSE and comprise part of the NIFTY 500. Twice a year, the index will be reviewed.

? The top 800 stocks, as determined by a combination of average daily turnover and 6-months average daily full market cap, shall be chosen as shortfall stocks if the number of stocks representing the BankNifty index in the Nifty 500 falls below 10.

? The aforementioned company must fall under the RBI Act's definition of a banking company in order to be eligible for inclusion in the index.

? The stock must have traded at least 90% of the time over the previous six months to qualify for inclusion in the BANKNIFTY Index.

? The business should also have at least a six-month listing history. The only exception is when a firm that would otherwise be eligible for inclusion in the index issues an IPO and is able to meet all the other requirements for inclusion for a three-month period.

? According to the index methodology, the Bank Nifty will only be able to include companies that are permitted to trade in the F&O segment.

? The free-float market capitalization (non-promoter) of the companies in question will be used to determine the final 12 entities.

? The index value will also be determined by reference to a base date, which will be January 1, 2000, in the case of the Bank Nifty.

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Disclaimer: This article is for information only and should not be considered as a recommendation to buy or sell any stocks.