Nifty Bank Share Price

NSE Bank Nifty index includes the large and most liquid domestic banking stocks. It records the market performance of the Indian banks giving investors and market intermediaries a benchmark so they can evaluate properly before investing. The index constitutes a maximum of 12 companies listed on the National Stock Exchange (NSE) and is computed through the free float market capitalization method. Investors or companies can use the Nifty Bank index for numerous purposes like benchmarking fund portfolios and launching index funds, ETFs and structured products. Though it was launched on September 15, 2003, Nifty Bank’s base value on the base date i.e, January 01, 2000, was set at 1000 and has given a CAGR of 24.61% in the first 10 years.

What are the eligibility criteria for the selection of constituent stocks under Nifty Bank?

1. At the time of review, companies should be a part of NIFTY 500. If the number of eligible stocks falls below 10, then according to NSE, the deficit number of stocks should be selected from the available stocks ranked within the top 800 based on daily average turnover and daily average full market capitalisation based on the data of previous six months which is used for index rebalancing of NIFTY 500.
2. The company should be a part of the banking sector and its trading frequency needs to be at least 90% in the past six months.
3. A listing history of six months is necessary for the company but if it comes out with an initial public offer (IPO) then it can be included in the index if it fulfils the eligibility criteria for three months instead of six.
4. Only those companies can be a part of the index which are allowed to trade in the F&O segment.
5. The final selection of all 12 companies is done based on the free-float market capitalization methodology by calculating the weightage of each company in the index in such a way that no stock weighs more than 33% and the top 3 stocks cumulatively should not be more than 62% during rebalancing. The index rebalancing is done on a semi-annual basis.

Who manages the Bank Nifty Index?

A professional team manages all the indices of NSE and follows a three-tier governance structure which includes the board of directors of NSE Indices Ltd, Index Advisory Committee (Equity) and the Index Maintenance Sub-Committee.

What is the Bank Nifty futures & options contract?

A forward contract trading on an exchange is called a futures contract. The Bank Nifty futures contracts are based on the Bank Nifty index. According to NSE, the maturity date of the contract, the underlying index and a market lot are some characteristics of the futures contract. These contracts are available for trading from the intro to the expiry date. Bank Nifty futures have a maximum of 3-month trading cycle - the near month (one), the next month (two) and the far month (three). A new contract is introduced on the trading day following the expiry of the near-month contract. The contracts expire on the last Thursday of the expiry month. If it is a trading holiday on the last Thursday, then contracts expire on the previous trading day.