NIFTY BANK is an index representing the 12 most liquid and large banking stocks which trade on the National Stock Exchange (NSE).
Also called ‘Bank Nifty’ in general usage, it represents the overall performance of constituent banking stocks and is used as a basis for banking derivatives (banknifty options, futures, etc.) and other dependent funds.
Like Nifty and Sensex, Nifty Bank is calculated using the free-float market capitalization method. The free-float market capitalization of a company is derived after excluding the government’s, promoters’ holdings, associate group cross-holdings, etc.
Base Date of Nifty Bank: 01 January 2000
Launch Date of Nifty Bank: 15 September 2003
Base Value of Nifty Bank: 1000
For Explanation in Hindi: निफ्टी बैंक क्या है? | NIFTY BANK Kya Hai?
NIFTY BANK Inclusion
Major eligibility criteria for inclusion of 12 companies in Nifty Bank are:
- Company must be from the Banking Sector
- Company’s trading frequency should not be less than 90% in the last 6 months
- Company must be part of Nifty 500 (or Nifty 800 in case of deficit in no. of selected stocks) and must be trading in F&O (Future and Options) segment
- Weightage of any single stock should not be more than 33% and the weightage of the top 3 stocks collectively should not be more than 62% at the time of rebalancing (Rebalancing cut-offs for Nifty bank are January 31 and July 31)
- Company should be listed for at least 6 months. This criterion is eased to 3 months for companies launched with IPOs.
NIFTY BANK Calculation
BANK NIFTY = (Total Free-Float Market Capitalization of 12 Constituent banks / Base Market Capitalization of constituent banks as on January 1, 2000) x (Base Index Value)
where,
Free-float market capitalization of a company = (Total no. of shares of the company readily available for trading in the market (excluding Government’s, Cross-holdings, Promoters’ holdings, etc.)) x (Current stock price of the company)
Base Market Capitalization = Market capitalization of companies under consideration as on base date January 1, 2000
Base Index Value = 1000 (Fixed. As decided to indicate nifty bank index value as on base date January 1, 2000)
NIFTY BANK Constituents
Current 12 constituent companies of Nifty Bank (2020) are:
| Company | Weightage |
|---|---|
| HDFC Bank Ltd. | 28.83% |
| ICICI Bank Ltd. | 19.61% |
| Kotak Mahindra Bank Ltd. | 14.89% |
| Axis Bank Ltd. | 14.36% |
| State Bank of India | 10.44% |
| IndusInd Bank Ltd. | 4.39% |
| Bandhan Bank Ltd. | 2.71% |
| Federal Bank Ltd. | 1.42% |
| RBL Bank Ltd. | 1.15% |
| IDFC First Bank Ltd. | 0.92% |
| Bank of Baroda | 0.73% |
| Punjab National Bank | 0.55% |