What is Bank Nifty Index?
Nifty Bank index is weighted index of Indian banking stock companies that are largely capitalized and fairly liquid.
It’s a portfolio of 12 Indian banking companies that shows the performance of included banks. Bank Nifty index includes both Private Sector banks and Public Sector banks.
Bank Nifty index is also known as “Nifty Bank”. In the year 2000, India Index Service and Product Limited (IISL) launched the index. 1st January, 2000 is the base date of the index with having base value of 1000 points.
The index was made to help the investors and other intermediaries to make better decisions by showing the benchmark of Indian capital market economy by showing their performance.
Computation & Trading in Bank Nifty Index
Nifty Bank is computed by free-float capitalization method.
Nifty Bank is traded frequently in both future and options market. It is highly liquid due to it’s high weightage in Nifty Index. It has a positive relation with Nifty Index.
For trading purpose, the current lot size of Nifty Bank is 25 units.
It was the first ever index that was traded weekly in the options market and now it has higher trading volume than nifty index.
Stock Selection in Bank Nifty Index
There are some criteria for selection of banking stocks in Bank Nifty index set up by NSE.
- Market Capitalization Rank
The selected bank should have market capitalization rank should be less than 500 in the universe.
- Turnover Rank
The selected bank should have turnover rank should be less than 500 in the universe.
- Trading Frequency
In the last six months, the trading frequency of the selected bank should be minimum 90%.
- Net Worth
Net worth of the selected bank should be positive.
- Listing History
The selected bank should have 6 months listing history in the stock exchange except in the case where the bank is coming with an IPO, and then it should have 3 months listing history.
- Futures & Options Segment
A bank company will be included in the bank nifty index only if it is traded in F&O (Futures & Options Segment).
- Free-Float Capitalization
Final Selection of 12 companies that will be included on the basis of free-float market capitalization method.
- Weightage
Each banking stock will have their weights in the index. No single bank shall have more than 34% share.
Further, weightage of top 3 banks combined should not be more than 63% while re-balancing.
- Re-Balancing
Nifty Bank index is re-balanced on half yearly basis on 1st January and 1st July.
Average data is considered for 6 months for re-balancing. Four weeks prior notice is informed to the market after such change.
- Governance
Nifty Bank index is governed by three-tier teams.
- Board of Directors of NSE Indices Limited.
- The Index Advisory Committee (Equity).
- The Index Maintenance Sub-committee.
Bank Nifty Stock Companies List with weightage
Below is the list of Companies that are included in Bank Nifty Index including their weightage as released by NSE India on October 1, 2020 on basis of closing prices of September 30, 2020.
- HDFC Bank – 26.68%
- ICICI Bank – 18.70%
- Kotak Mahindra Bank – 16.66%
- Axis Bank – 14.77%
- State Bank of India (SBI) – 11.14%
- IndusInd Bank – 4.79%
- Bandhan Bank – 2.11%
- Federal Bank – 1.63%
- RBL Bank – 1.19%
- IDFC First Bank Ltd. – 0.85%
- Bank of Baroda – 0.85%
- Punjab National Bank (PNB)- 0.64%
HDFC Bank has the highest weightage having 26.68% weightage in Bank Nifty Stock Companies index List, whereas ICICI Bank remains at second having 18.70% weightage & Kotak Mahindra Bank replaced Axis Bank for third position having 16.66% while Axis Bank moved to fourth place having 14.77% in Bank Nifty Companies Index List.
HDFC Bank, ICICI Bank & Kotak Mahindra Bank are also called bank nifty heavy weights stocks.
Punjab National Bank (PNB) has the least weightage in Bank Nifty Index with 0.64%.
There was exclusion of Yes Bank in the Bank Nifty Index on March 19, 2020. Bandhan Bank has been included in Bank Nifty Index.
Bank Nifty Lot Size
As per the circular Ref. No. 91/2018 dated September 28, 2018 issued by National Stock Exchange India Ltd, Bank Nifty Lot Size for futures & Options Contract has been revised to 20 units from 40 units.
Now the nifty bank lot size has also been revised to 25 units from 20 units.
Banknifty Share Price Live Chart
Check the Bank Nifty Today for current bank nifty share price.
I am surprised that the data presented here is very different from what I see in the NSE website for NSE BANK NIFTY FACT SHEET. The weightages as per the fact sheet seem to be updated on SEPTEMBER 30th 2020. Your data is as of OCTOBER 1st. But confused why they are different. Does the weightages change every day ?
Just confused. Hope someone can clarify why would weightages of bank nifty change on monthly or daily basis when it is supposed to be rebalanced once in 6 months? I observed different weightages updated in fact sheet for August, september and october months. can some one help me understand why will it change that frequently ?
I need this info badly. thanks for responding.
Hi Onlydravid,
The data here is the same as on nse website. This data belongs to the closing prices of Sep 2020 as already mentioned in the article. Oct 1 is the date when it has been updated on the this site.
Weightage of each stock changes every day as price changes of every stock, but on nse website and even on our website weightage is updated at the end of the month.
You are right that re-balancing is done once in 6 months because nse reviews the structure of Nifty and bank nifty, as no single stock can have more than 15% share in Nifty 50 and 33% share in Bank Nifty and not more than 62% of top three shares in bank nifty.
In between 6 months, these weightage can increase from the prescribed limits.
Hope this would clarify you.